P2P Lending

There has been exponential growth in P2P lending in recent years

Is it a liquid fund? Is it a fixed deposit? Is it a collective investment scheme?

Initiatives to make returns more attractive and spread risks in order to keep the default rate low for individual lenders have spurred interest in this segment once again

Decoded: Should you try peer-to-peer lending to maximise your returns?

Looking for investment options for high returns? P2P lending could get you 9-12% interest rate? Appealing, right? But there are some riders. Let's understand all about peer-to-peer lending.

Limit lending amount and diversify among borrowers

With no upper limit, the interest rates in the platform can go as high as 35 per cent, on a reducing balance

It is a good opportunity for HNIs as returns can be extremely attractive

Some of the players in the sectors are themselves wary of this unregulated interest rate regime

The lender investing more than Rs 10 lakh across P2P platforms will produce a certificate to P2P platforms from a practising Chartered Accountant certifying minimum net-worth of Rs 50 lakh

Apex bank also does away with requirement of escrow accounts run by a bank-promoted trustee for transfer of funds

From RBI's surprise on repo rate to the Reserve Bank raising the lending limit of Peer-To-Peer platforms five-fold, Business Standard brings you the top headlines of the day

At present, borrowing from the P2P platform by a single entity is also limited to Rs 10 lakh. Most micro and small enterprises have loan requirement between Rs 5-25 lakh

RBI is mulling allowing individual investors to raise their exposure to P2P lending start-ups to Rs 25 lakh as against Rs 10 lakh at present

Investors can earn as much as 12-36 per cent, but limiting the amount to each borrower will help contain losses

Industry players want the RBI to raise the lending limit for individual borrowers and remove it for institutional lenders

Rs 10 lakh cap on lending is restrictive, say players

With these platforms getting access to credit bureaus, small borrowers, who find it difficult to get loans from banks, can use them to build a credit profile

Possibility of 16-22% annual returns is attractive but analysts suggest caution till norms are put in place

The industry is expecting RBI to create separate category of NBFCs for P2P lending on the lines of NBFC MFIs

Final guidelines expected soon; P2P players may also get access to credit bureau data