• Any individual, including an individual, a body of individuals, a HUF, a corporation, society or any artificial body, may participate in the loan platform for P2P.
• P2P lending is governed by the NBFC Peer to Peer Lending Platform Master Directions.
• Released in 2017 by the RBI. With the approval of the RBI, only the NBFC may register as a P2P lender. A certificate of registration from the RBI should be obtained by any P2P lender. The Department of Non-Banking.
• Regulation, Mumbai, should register any current and non-banking NBFC-P2P.
• Furthermore, the P2P should have at least 20 million net owned funds and fulfill the other conditions laid down by the RBI. A debt ratio not exceeding 2 must be maintained by P2P lenders.

• A P2P lender may serve as an intermediary, providing the participants with an online marketplace or forum.
• Pursuant to Section 45I(bb) of the RBI Act, 1934 or the Companies Act, 2013, a P2P lender shall not raise deposits.
• A P2P lender is unable to lend, offer or arrange any credit enhancement or a credit guarantee on its own.
• A P2P lender, except for loan-specific insurance products, can not lend on its own, allow an international flow of funds, or cross-sell any item.
• A P2P lender should ensure that the participants comply with the legal specifications laid down by different applicable laws
• Process and maintain data storage on hardware located within India for all data relating to its activities and participants.

The creditors from the individual financial investors (principal) are willing to lend their own credit to the creditors at an equitable rate of interest on the peer-to-peer lending network.

The profiles of the borrower are displayed on the P2P lending platform from which the borrower can unhindered select the profile of the borrower and lend their money. There are no relations between the moneylender and the buyer. It is not significant.

It is not necessary to receive a complete loan from the proposed borrower; he may be given a measure of what a financial specialist requested (investor). For the remaining sum, at least one lender could offer the credit at the P2P lending point.

• Easy-to-use platform: The entire peer-to-peer lending scheme operates solely on an online platform. The application method is also fast and easy. Securing funds on the P2P automated platform is handy. In general, a list of investors who loan loans to borrowers and merge them through an automated matching mechanism is provided by the peer-to-peer lending platform. This means that the processing time can be fast and sometimes even as little as a few hours to get the cash.


• Access to more inexpensive rates: In comparison to conventional lenders like banks, one also gets access to loans at lower interest rates on P2P platforms. Investors directly lend money to borrowers across peer networks. For both sides, the absence of any overheads in P2P is the greatest advantage, and interest rates are set at reasonable rates.


• For traditional lenders, P2P lending is an ideal alternative: P2P serves as a great substitute for conventional financial modes. For people who require alternative finance for their personal and professional needs, it plays an important role.


• Borrowers just have to connect to the peer to peer network: The P2P platform ensures that the lending and borrowing process is streamlined by intermediaries between the parties. It means that a borrower doesn’t have to create an investor relationship; he can keep anonymous. Where all payments are only transferred through the platform.


• Higher flexibility than banking and unsecured loans: A P2P network as an unsecured credit provider demands no collateral, which in banks is not so. You must then deposit your personal property as collateral to seal the deal if you take a loan from a bank. P2P has the sole justification for a quicker application process and gives you shorter access to funds.

Any business entity whether a private company or a public company is eligible to start a P2P loan business, in order to first need to apply to the RBI for a P2P license. In this regard, they need to achieve the following:

• The organization must be registered in India as a Private Limited or Public Limited Company for the main financial purpose.
• Profit at least has assets of INR 2 crores.
• Website / Mobile Application Performance.
• The online application is available on the RBI site (COSMOS).
• A copy of the printed version of the program and the accompanying documentation will be sent to the RBI Office
• Permission will be granted after reviewing the application monitoring and documentation attached to it.

• The company must be based in India, and have the necessary technical, business, and administrative resources to provide P2P lending services to participants.
• The company must have sufficient financial structure and management to conduct the P2P lending business.
• The company has implemented a Peer to Peer Lending Platform.
• The company is issued with a Certificate of Registration (CoR) to serve the public.
• Any other condition imposed by the bank for the purpose of starting a business or conducting business in India.

To the satisfaction of the above-mentioned circumstances, the RBI provides approval in favor of establishing a P2P lending platform. The authorization will remain valid for 12 months during which the platform must incorporate technology and documentation to take effect. The RBI, after being satisfied that the P2P platform is ready to start operating, may offer CoR as NBFC P2P, subject to conditions deemed appropriate by the bank.

P2P companies have the following responsibilities to their partners:

• To exercise due diligence on its participants before accepting them as participants on the platform.
• Performing risk assessments and credit assessments of registered lenders and disclosing the same to registered lenders.
• Seeking clear and prior consent of participants to access its credit information.
• Drafting of loan agreements and other relevant documents.
• Provide assistance in repaying and repaying the loan amount.
• Provide loan repayment services from the platform.

• For Peer to Peer Lending platforms, funds will be transferred between participants through the Escrow account method, which will be used by the Trustee.
• Two small Escrow accounts need to be maintained – one for receiving credit from creditors while waiting for withdrawals and the other for lenders.
• All transactions will only be done through bank accounts. Currency transactions are not allowed at all.

P2P lending companies are strongly required to become members of Credit Information Companies and submit relevant information to them. These include:

• Keeps the credit details of creditors and lenders well maintained and updates the same at such times, as determined between the Company and the CIC.
• The necessary steps that may be required to ensure the credit information provided by it are standard, accurate, and complete.
• In agreements with participants, it will include the appropriate permission to provide credit information.

Peer to Peer Lending Company will be required to disclose the following to the lender:

• Information relating to the identity of the borrower, the interest rate required the required loan amount, and the loan.
• Details regarding terms and conditions relating to loans such as repayments, taxes and levies.

• Details about the amount proposed by the lender and the interest rate offered. It is not mandatory to disclose the personal identity and contact details of the lender to the borrower.

• Grievance Redressal System
• Detailed Business Model
• Portfolio Performance every month, which covers portions of non-performing assets
• Disclosures on usage and security of user data
• The frame of credit assessment and parts examined for the same