i2ifunding.com, leading peer-to-peer lending platform has announced first-of-its-kind investor protection fund, which will allow its investors to enjoy up to 100% protection against loan defaults.
Speaking about the announcement of Principal Protection Fund, Vaibhav Pandey, Co-founder and CEO of i2ifunding.com said, “The principal protection fund is a step further in our commitment to build a healthy ecosystem. The investors on our platform now significantly reduce the risk of losing their principal because of a loan default. While we ensure that there are no defaults, even if they do happen, we will share the burden with the investors. With this fund, we have increased our skin in the game.”
The participation in the ‘Principal Protection Fund’ is available by default to all investors who lend through the platform. There are no extra charges for the same. i2ifunding.com will set aside 5% of the disbursed loans towards the Principal Protection Fund. The company has already created an initial corpus to set up the Investor Protection Fund.
Principal protection is offered to investors so that in case of default, a certain percent of principal outstanding will be returned to them by i2ifunding.com.
i2ifunding.com defines a risk category for every borrower on its platform. These categories are from A to F, where A is the safest and F the riskiest. The extent of principal protection depends upon the risk category of the borrower. 100% principal protection applies to risk category A, while category F has a 50% protection.
The final refund of principal to investors may depend on the amount available in the protection fund. The platform has witnessed zero default on its loans so far. This also speaks about the creditability of i2i’s credit risk analysis algorithm. Thus, the company has decided to offer principal protection to its investors to further increase their confidence.