Is P2P lending legal in India?
Answer
The P2P lending market is an emerging industry within India’s financial services sector. While the P2P market has existed globally for almost a decade now, its presence in India is relatively new.
Not only is P2P lending legal in India, in fact, it is now regulated by the Reserve Bank of India (RBI) as well. The RBI, in a circular in August last year, mandated such P2P lending companies to obtain requisite approval to register themselves as a non-banking finance company (NBFC).
Faircent is among the first P2P lending platform to receive this NBFC-P2P certification. The other major P2P platform, i2i Funding.com, has already applied for an NBFC licence.
The P2P lenders that have received the approval are:
- Faircent
- i2i Funding.com
- Lendbox
- I-lend
- Monexo
- Lendenclub
Investors or lenders can choose from among a set of borrowers on the platform and can diversify their risk by lending to multiple borrowers. Typically, the minimum and maximum amount per borrower is kept at Rs. 5,000 and Rs. 50,000, respectively, in order to cap the risk.
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