Danain P2P Lending Startup Offers Gold Collateral-Based Loans

In the midst of the rise of p2p lending players scattered across Indonesia, there are opportunities that are explored and have a different approach compared to other players. This is what Danain p2p lending startup takes advantage of by using collateral as a condition for borrowers.

"In accordance with the philosophy of our founders, where we always put safety first for our lenders, we started our fintech business with a different approach. We always require collateral in Danain services," explained Co-Founder and CEO Fund Budiardjo Rustanto to DailySocial.

He explained that, unlike other p2p players, Danain requires borrowers to have collateral and the maximum funding value is 86% of the collateral value. Those who carry out the assessment and deposit collateral are competent private pawning partners of Danain. Items that can be used as collateral can be gold in the form of jewelry or precious metals.

The working process is, the borrower pawns the collateral items to the pawn partner to assess the value of the loan and disburses the loan funds to the borrower. Furthermore, with the approval of the borrower, the data and transactions are retrieved by the Danain platform to be met with willing lenders.

When the lender agrees with the funding, the lender's funds are distributed to partners who have disbursed loans to borrowers. After the borrower pays off the loan and interest to the partner, then the partner returns the amount of funding along with the interest to the lender.

The maximum amount of funds that can be borrowed depends on the value of the gold mortgaged by the borrower, with an interest rate of 8% per year and a maximum tenor of 4 months.

"After cutting management fee which is the right of Danain's partners and platforms, lenders will get interest from this funding transaction of at least 8% per year."

Budiardjo believes that this method can reduce the risk of bad credit. It is claimed that Danain's bad credit ratio is 0%. Another factor is the presence of competent pawn partners in appraising pawn goods.

Danain's pawn partner is PT Mas Agung Sejahtera (MAS), a private pawn company that has been registered and supervised by the OJK, which is none other than Danain's holding company. Danain itself has obtained a registered certificate since April 2018. Business operations began in November 2017.

MAS is a pawn company that already has more than 50 branches throughout Indonesia. The company is a subsidiary of the Serba Mulia Group which has been operating for 40 years and has various business lines from automotive and finance.

Business goals

Budiardjo said that since operating last year, Danain has now had nearly 1.000 borrowers with a total disbursed funding of IDR 5 billion. Borrowers are spread across several MAS branch offices in Jakarta, East Java, Bali and NTB. While the average lenders are located in Jakarta, East Java and Kalimantan.

Until next year, Danain targets the number of borrowers to reach 15 thousand people. The loans disbursed amounted to IDR 120 billion.

"Next year's funding distribution target must be optimistic three times that of this year."

According to him, with a trusted company background, he believes Danain can participate in education and socialization of fintech companies, especially in p2p lending.

"We always emphasize that Danain is committed to maintaining our business reputation and operating our business with a high level of prudence. This is the foundation for all of our business decisions because it is in line with our holding reputation," he concluded.