Peer To Peer (P2P) Lending Business In India
Peer to Peer (P2P) lending, also known as social lending/cloud lending is a method to finance debt which enables individuals to lend and borrow money without the involvement of an official financial institution as an intermediary. Basically, it eliminates the need of middlemen involved in the process but is time-consuming. In P2P lending, lenders are free to choose whom to lend and can diversify their options among different borrowers.
Eligibility Criteria for Peer to Peer Lending Registration
Requirement Of The Documents For Peer To Peer Lendng Registration
Every existing and prospective P2P needs to make an application for registration to the following Address ‘ the Department of Non-Banking Regulation, Mumbai of the Bank’, in the form specified by the Bank along with additional documents. Whereas existing P2P can apply for the peer to peer lending registration within three months from the date these documents were issued.
Scope Of Activities
Limitations
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Platform for p2b lending is a kind of device which connects the participants to interact with each other.
The validity of the in-principle approval by RBI would be 12 months from the date of granting such approvals.
As per the directions, only bank transfers are allowed to transfer the funds. In other words,no cash transfers can take place.
| Particulars | P2P Lending | Fixed Deposits |
|---|---|---|
| Returns | 18-24 % | 6-8% |
| Diversification Options | More | Less |
| Interest Rate Risk | Not Present | Present |
| Portfolio Creation | Allowed | Not Allowed |
| Freedom of Terms | Yes | No |
