InvestorQ : I recently heard someone discuss P2P lending. Can you tell me what it is?
Nitin Shah made post

I recently heard someone discuss P2P lending. Can you tell me what it is?

Answer
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2 years ago


P2P or peer-to-peer lending is a form of borrowing and lending money which has become quite popular in India recently.

P2P helps formalise non-institutional lending between individuals. Thus, this is not the usual process of taking a loan from a bank or a non-banking financial company (NBFC).

P2P provides a platform for exchange of money between people who have money and people who need money in the form of a loan to be returned later. People with idle funds can now extend a loan to borrowers anywhere across the country and earn returns on their funds in the form of interest.

P2P lending helps borrowers in need of money connect with lenders from across India to crowdfund their loans. The returns are attractive enough for lenders to invest small amounts of money across multiple borrowers. Borrower details are thoroughly checked by the P2P lending platform and an assessment of the borrower’s credit profile is performed and the profile is then presented to the lenders.

Online P2P lending started in the US almost a decade ago and is gaining popularity in India. This is because Indians have seen significant rise in their disposable incomes and are more experimental towards using/investing their money.