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The Evolution of Lending Systems in India

The evolution of lending systems in India

The concept of borrowing and lending money has been around for ages. Today, if you are looking for ways to lend money online to someone, the transaction comes with benefits to both parties. The person seeking money gets the amount he or she is looking for. On the other hand, the lender makes a prudent investment where he or she gets back the entire loaned amount after a time, along with an interest.

The age-old idea of lending has given birth to banks, smart loan solutions, and every money lending app that you see on the market today. However, have you ever wondered about the inception of lending in India? Let’s take a look at its history through the years.

A brief history of the money lending system in India

  • In pre-British Rule India:

    During the 2nd century CE, the basic idea of money lending gained a foothold in India. People considered it a legitimate method of amassing wealth. It became more structured in the Mauryan era. You will be surprised to know that there were well-defined loan deeds back in the Mauryan Empire. This can be traced back to 321 BC.

Kautilya’s texts from the Mauryan Empire’s rule give a clear insight into the well-developed lending system of that era. Complicated modern-day concepts like the Bill of Exchange and Letter of          Credit were also practiced. Furthermore, the Mughal era had two distinct money lending forms. First was the mode of money payable on demand, and the other was the mode of money payable after a time. This points towards a primary iteration of bank loans.

  • During the British Rule of India:

    The latter half of the 1800s saw major changes in the lending-borrowing market of India. The onset of British rule refined a lot of lending structures. It was the precursor to a lot of modern-day transactions like peer-to-peer lending. We have a standardized and structured money exchange thanks to high interest rates.

The development of major banking institutions brought uniformity to money lending in the British era. Notably, the Union bank of Calcutta and the Allahabad Bank was established during this period. Automatically, it became the banks’ authority to lend money. Interest rates were standardized and payable periods were decided upon. Several public sector banks and a private sector bank came into existence. This furthered the concept of lending and borrowing money among the masses.

  • In post-Independence India:

    The major development in the country’s financial structure happened post India’s independence in 1947. The country went through troubled times and had to undergo Partition. As a result, the banking structure also modified to adjust to the country’s changing dynamics. The Reserve Bank of India or RBI, was set up during this time. This step opened up the doors for India to conduct regularized financial transactions across the globe.

This crucial period saw the growth of India’s lending market. Products like home loans, personal loans, and automobile loans slowly started coming into the picture. People became more and more accustomed to the idea of lending and borrowing.

Modernization of money lending in India

Globalization has revolutionized the lending industry. People no longer depend solely on banks for lending and borrowing money. Instead, innovative ideas like P2P lending have come into the picture. The introduction of cutting-edge technology has made this possible. Gone are the days when you had to wait in queues for hours to invest your money or fill in a loan form. Instead, putting your money in the lending market has become one of the best investment opportunities of current times.

Thanks to smart technology and trusted platforms like LenDenClub, P2P lending platform has become a household concept. In this type of transaction, you can invest and lend your money to a part of a pool of borrowers. Experts have termed P2P lending as the way ahead in the future.

The benefits of products like LenDenCLub’s Fractional Matchmaking Peer-to-Peer Plan Investment Plan or FMPP® are plenty:

  • Quick and seamless: Due to AI-enabled technology used by almost every P2P money lending app, the process of investing and lending is swift and seamless. People carry out almost all transactions digitally.
  • Safe and secure: Since most modern-day lending transactions are digital, the process is extremely safe. Digital verifications provide layers of security. The user details and the money are extremely safe and less risky. So, you can invest in companies like LenDenClub peacefully.
  • High returns: For investors, putting money into P2P lending is a win-win situation. On one hand, the rates of returns are quite high; on the other, AI-based technologies strategically mitigate the risk of investing your money. Hence, it is a relatively safe investment where you can reap the benefits over a period.
  • Easy diversification: For investors looking for new ways to diversify their portfolio, products like FMPP from LenDenClub offer the perfect solution. LenDenClub’s FMPP® plan diversifies a money lender’s investment into many chunks, some as small as INR 1. It then uses these chunks to service different loans, thus diversifying the risk.

Why should you invest in LenDenClub?

LenDenClub allows you to invest your money in the revolutionary Fixed-Maturity Peer-to-Peer or FMPP® investment plan.

As a reliable P2P lending platform, LenDenClub has more than 2 million investors. Furthermore, FMPP investors have earned upto 12% p.a. since launch. You can invest your money for a flexible period from one to five years. Due to its brilliant technology and process-oriented mechanisms, LenDenClub has emerged as one of India’s top peer-to-peer lending platforms. Now, it is your time to invest and grow your wealth for years to come! Invest Now!

LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping investors diversify their investments beyond traditional investment instruments ever since.



The Reserve Bank of India does not accept any responsibility for the correctness of any of the statements or representations made or opinions expressed by Innofin Solutions Private Limited, and does not provide any assurance for repayment of the loans lent through its platform.

LenDenClub is an Intermediary under the provisions of the Information Technology Act, 2000 and virtually connects lenders and borrowers through its electronic platform via the website and/or mobile app.

The lending transaction is purely between lenders and borrowers at their own discretion, and LenDenClub does not assure loan fulfilment and/or investment returns. Also, the information provided on the platform is verified or checked on the best efforts basis without guaranteeing any accuracy of the data/information verification. Any investment decision taken by a lender on the basis of this information is at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower, fully or partially. The risk is entirely on the lender. LenDenClub will not be responsible for the full or partial loss of the principal and/or interest of lenders’ investment amounts.


*P2P investment is subject to risks. And investment decisions taken by a lender on the basis of this information are at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower.

** Average value mentioned is the weighted average of returns received by investors

© 2023 LenDenClub by Innofin Solutions Private Limited | CIN: U74999MH2015PTC266499


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