INDIA P2P LENDING 2023

INDIA PEER TO PEER LOAN INDIA P2P LENDING 2023 INDIAN P2P LOAN LENDER

WHAT IS P2P LENDING IN INDIA ? DEFINITION

WHAT IS P2P LENDING IN INDIA IN 2023 ? DEFINITION

In India, P2P lending in 2023 is by definition a funding solution that enables Indian individuals to obtain loans directly from other Indian individuals (Peer-to-peer), without involving Indian financial institution as the intermediary.

In India, P2P or Peer-to-peer lending consists of as financial technology that allows Indian people to lend or borrow money from one another without using the services of a bank, given that an Indian borrower seeks an alternative to Indian banks.

In India, the Peer to Peer loan is a new way to access lending services by using the P2P principles which is the disintermediation process of removing any intermediary from loan and financing transactions in the Indian subcontinent.

In India, P2P lending in 2023 is dedicated to lending only through peer-to-peer platforms without using the banks to borrow money, Indian P2P is covering now other type of services as well where Indian individual can exchange services without involving Indian intermediaries.

HOW DOES P2P LENDING IN INDIA WORK ?

HOW DOES P2P LENDING IN INDIA WORK IN 2023?

In India, the P2P lending sector in 2023 works such a way that it is also open to those who could not get the loans for business purposes easily and who were refused loan by Indian banks, because of a poor credit history and bad credit score, peer-to-peer lending has a positive risk history and of being lower risk for lenders, finally in some Indian platforms, lenders have made losses so that some platforms lend selectively to creditworthy borrowers.

In India, peer-to-peer lending platforms bring individual borrowers and lenders together, ignoring traditional banks so that both, lender and borrower get a better rate: Indian lenders receive more interest than from a bank savings account and Indian borrowers pay less than on a classical loan obtained from an Indian bank.

INDIAN P2P LENDING PLATFORMS RULES

Indian P2P lending platforms have been allocated certain constraints as what is permitted and not:

Indian P2P platform’s role is to bring the borrowers and lenders only, they don’t act as financial intermediaries (off-balance sheet).
Very often platforms have no influence on the interest rate as they are agreed between lender and borrower.
Lending platforms charge generally a fee of ca. 1% on the borrowed amount form the lender
P2P companies cannot promise exagerated high returns to the lender.
Both lender and borrower have to be resident in India avoiding any cross-border transaction.
Cash moves directly from lender to borrower without transiting through the platform.

INDIA P2P LENDING MARKET SIZE IN 2022 ?

WHAT IS INDIA P2P LENDING MARKET SIZE IN 2023 ?

India P2P loan market in 2023 is already the largest offline P2P lending market in the world as a majority of Indians relies on friends and relatives or private lenders for borrowing cash nowadays and traditional peer-to-peer lending even being offline currently is in fact the largest loan provider in the country with the bank loans only having 20% of the Indian financing market share.

The Indian P2P market size in 2023 ca. USD 7.8 Billion and is expected to grow to USD 11 Billion by 2025 against USD 450 Billion worldwide, and registered peer-to-peer companies at RBI (Indian financial regulator) are amounting to 15 in 2022.

India’s P2P market size aims on the long term to compensate the credit demand and supply gap in India is of USD 400 Billion according to World Bank sources.

P2P LENDING FOR WHOM IN INDIA ?

P2P LENDING FOR WHOM IN INDIA ?

India P2P lending is dedicated to different types of borrowers, individuals and entrepreneurs depending on their specific situations:

P2P lending for Indian individual.
Peer-to-peer borrowing from entrepreneurs and business people.
LP2P for Indian startup.
P2P for unemployed people without proof of income.
Peer-to-peer lending for Indian farmer.
P2P microloan for poor people.
Peer-to-peer lending for elderly senior retired people.
P2P loan for disabled.
Peer-to-peer for housewife and women.
Peer-to-peer for student.

RBI (RESERVE BANK OF INDIA) REGULATION P2P LENDING

RBI (RESERVE BANK OF INDIA) REGULATION OF THE INDIAN P2P LENDING MARKET 2023

The Indian regulator through the Reserve Bank of India (RBI) initiated meanwhile measures to regulate the exploding peer-to-peer lending business in the country, as a consequence, the regulator has now proposed to consider and register Indian P2P companies as non-banking financial companies or NBFCs.

Some new rules have transpired from the new policy and which could be adopted soon:

P2P institutions will need to hold a minimum RS 2 crore or USD 273,000 of capital in reserve in future.
P2P companies should maintain physical presence in India and provide with have necessary technological, entrepreneurial and managerial resources to offer P2P lending services to the participants.
Lender’s exposure or risk to borrowers should be limited to a certain amount with a minimum money lent of Rs 500 and the maximum amount per lender being capped for all P2P platforms at Rs 50,00,000. Exceptions are made however, if a borrower asks for more than Rs 10,00,000, third party certification must be provided that the lender minimum net-worth is above Rs 50,00,000.
P2P platforms to put in place risk management systems and business continuity plan.
Directors and managers of the P2P platforms should be experienced in the financial sector.

WHAT TYPE OF P2P SERVICES ARE EXISTING IN INDIA ?

WHAT TYPE OF P2P SERVICES ARE EXISTING IN INDIA IN 2023?

Peer-to-peer services in India are in 2022 and 2023 becoming various and follow the success of P2P lending with the establishment of new creative types of Indian peer-to-peer platforms such as: