Peer to Peer Lending – An Overview

1. What is Peer to Peer to lending?
   P2P lending connects people who want to lend money to those who need it. The borrowers pay interest, and the investors/lenders earn interest.

2. Purpose of P2P lending?
   The Purpose of this P2P lending is to help People with low credit scores or people that lie in the low income category. On the other hand it helps the investor to get good Returns.

3. How P2P lending works?
   As India goes digital in all directions, P2P lending is one result. Investors and borrowers
   can connect in one platform with P2P lending.

4. How P2P lending platforms assess the credit worthiness of borrowers?
   They perform their checks, including the borrower’s employment, income, credit history, etc. Not just that, using technology extensively, these platforms also capture borrowers’ habits through social media activities, app usage, etc.
   Based on the above assessments P2P platform decides Interest for the loan.

5. Whether P2P lending is regulated by RBI India?
   Yes. RBI has set few rules and regulation related to P2P lending. So P2P lending works based on that.

6. Average portfolio return lender can earn in P2P?
   12 to 13% p.a

7. Risks involved in P2P lending?
   In general, the highest rate of return comes with the highest risk. Thus, P2P lending is not risk-free. Only the risk involved with peer-to-peer lending is the risk of default by the borrower. The Market related risks is not there in P2P lending.

8. Whether Interest Earned by the lender/Investor is Taxable?
   Yes – It is a part of Income from Other Sources and taxable as per the Tax slab

9. Who can participate in P2P lending?
   Any person including an individual, a body of individuals, a HUF, a firm, a society or any artificial body, a company can participate in the P2P lending platform.

10. Minimum and Maximum limit for P2P lending?
    Minimum: 500 – 1000
    Maximum: 50,00,000
    Note : if a lender lends above Rs 10,00,000, a certificate from a practising Chartered Accountant certifying minimum net-worth of Rs 50,00,000.

Top 5 P2P Platforms

• Lendbox
• i2ifunding
• Faircent
• OMLP2P
• i-lend
• LenDenClub