Smart Lending

P2P LENDING IS EMERGING AS AN ATTRACTIVE INVESTMENT OPTION IN THE DEBT SEGMENT PROMISING 15-20 PER CENT RETURNS

- APRAJITA SHARMA

If you have money to invest for the short term, you can consider a new option in the debt segment other than traditional debt instruments such as debentures and bonds – peer-to-peer (P2P) lending, which has emerged as an attractive avenue for people who don’t mind taking some additional risks for extra returns. This involves lending money to individuals or businesses through online services that match lenders with borrowers. Recently, even the Reserve Bank of India (RBI) showed confidence in the fledgling segment by revising a lender’s exposure limit across P2P platforms from ₹10 lakh to ₹50 lakh. Experts say one can earn good returns by diversifying risks across types of borrowers.

Key Regulatory Developments

P2P players have been in existence since 2012, when the first platform – i-Lend – was launched. Initially, there was hardly any regulatory oversight. Seeing the potential of the evolving technology and growth of lending to the underserved, the RBI came out with guidelines in September 2017, to convert P2P players into NBFCs by issuing NBFC-P2P licences. There are around 30 P2P players in the country of which 20 had got the NBFC-P2P licences as on October 31, 2019; the rest have applied for it.