Bengaluru: MicroGraam, i-lend, LenDenClub and several other peer-to-peer lending platforms are tying up, or considering to do so, with insurance companies to offer cover for borrowers against unforeseen events such as accidents or death that can affect loan repayments. These platforms are partnering with insurers like HDFC Life Insurance and ICICI Prudential Life Insurance.

While most of them plan to unveil the offers after the Reserve Bank of India issues guidelines on such covers — companies said they expect the central bank to come up with the regulations later this month — some have already started offering such products. Venture Catalysts-funded i2iFunding last month partnered with HDFC Life Insurance to offer insurance plans to borrowers.

“If a borrower takes a two-year loan for Rs 1lakh, then for a slightly higher amount he will have to take the life insurance cover, where one of his family members will be the nominee. The person who is supposed to get the insurance benefit will only get it once we approve it and would ideally receive it once they clear their due,” said Founder Vaibhav Pandey.

The platform, which has received about 5,000 applications till date for the cover, has 150-200 running loans and as many as 1,000 lenders. MicroGraam, which so far focused on providing peer-to-peer lending services in rural India, has a similar cover embedded into the loan itself. It provides cover to the rural poor through two forms, livestock insurance and personal insurance.

The cover is for two times the value of the loan, the maximum is for Rs 50,000 and the minimum for Rs 20,000, said Founder Rangan Varadan. “…when they take a loan, the insurance is part of it and is included in the interest rate charged. When we launch (lending services) for the urban Indian users, we will look to partner with insurance companies.”

The platform, which has about 14,000 borrowers, claims to have disbursed Rs 22 crore in loans till date.

Shankar Vaddadi, Founder of ilend, is currently working on an insurance plan for borrowers. The process can be slightly complicated, he said.

According to the Insurance Regulatory Development Authority, the beneficiary has to be related to the individual who is covered and cannot be a third party, he said. “(So) you have to create a group scheme and make everyone a member of that scheme, once the group gets paid the insurance, the amount will be used to repay the lender and the balance will be given to the borrower.”

The platform, that has disbursed Rs 2 crore in loans, is currently in talks with two insurance companies and plans to roll out an insurance product after the RBI guidelines are out.

Source: Times of India