peer to peer Lending scope in India. P2P Lending in India is growing at a faster rate nowadays. Under these borrowers get the advantage of getting funds at comparatively lower rates while the lenders get a better return on their investment in comparison to other conventional lending methods. Peer to Peer lending (P2P lending) is one of the methods of obtaining finances for your business. P2P functions as an online platform offering ease of access,

1. Peer to Peer
lending

2. Peer to Peer (P2P) Lending
Peer to Peer lending (P2P lending) is one of the methods of obtaining finances
for your business. P2P functions as an online platform offering ease of access,
flexibility and choice of lending and borrowing for lenders and borrowers. P2P
model aggregates lenders and borrowers, facilitates the matching of lenders
with borrowers.
Lenders can get earn interest higher than from bank savings, while the
borrowers can obtain funds at an interest rate lower than banks.

3. P2P business model
The P2P lending model is based on the crowd-funding model. Most of the
P2P lending platforms are organised as (Non-Banking Financial Companies)
companies. Unlike traditional banking and financial institutions,
The P2P model is a modern credit model to meet current business credit
needs.
Under the P2P business model, an auction is conducted where the lender
can make a bid for a borrower’s loan requirements and the borrower can
either accept or reject the bid. Further, the platform can offer services such
as credit assessment, recovering loans, and so on. The platform generally
co-ordinates the transaction between the lender and the borrower.

4. RBI regulations
Any person,a body of individuals, a firm, a society or any artificial body, a
company can participate in the P2P lending platform.
The P2P lending is regulated by the Master Directions for NBFC Peer to
Peer Lending Platform issued by the RBI in 2017.
Only an NBFC can register as a P2P lender with the permission of RBI.
Every P2P lender should obtain a certificate of registration from the RBI

5. Peer To Peer Lending
P2P Lending in India is growing at a faster rate nowadays. Under
these borrowers get the advantage of getting funds at
comparatively lower rates while the lenders get a better return on
their investment in comparison to other conventional lending
methods.
P2P lending platforms are concentrating on the micro-finance
activities catering to the financial needs of the small entrepreneurs.

6. Peer To Peer Lending In India
In India, there are around 30 new startup P2P lending companies.till April
2022.
This platform is helping a huge section of borrowers who have been
rejected to qualify for a loan from banks.
Peer to peer lending has helped consumers to get loans in categories
such as consumer lending, small business lending, and property lending.

7. Challenges Facing the Creation of P2P Lending Platforms
1. Technology Infrastructure
The technology infrastructure that houses the P2P lending platforms needs to be
scalable and secure. The data management systems in place should be efficient, the
implemented payment gateways need to be reliable, and installed servers must be
robust.
2. User Experience and Interface
Attracting and retaining users on a P2P lending platform calls for an intuitive and
user-friendly UI (User Interface) design. The loan application processes should be
intuitive with easy interface navigation for a seamless borrower and lender experience.

8. Challenges Facing the Creation of P2P Lending Platforms
3. Security
The regulatory landscape that governs the operation of P2P lending
platforms has necessary complexities. It ensures compliance with Know
Your Customer (KYC), anti-money laundering (AML) laws, and data
protection & privacy regulations requirements.
4. Risk Assessment and Management
One critical challenge that P2P lending platforms cannot avoid is managing
default risk after successfully evaluating a borrower’s creditworthiness.
Therefore, there is a need to develop effective risk assessment models and
algorithms to assist in accurately analyzing complex financial indicators,

9. Types of P2P Lending Software
1. Direct P2P Lending Platforms
Lenders and borrowers on these software platforms have a direct c
hannel of communication and do not need intermediaries or
middleman intervention from banking bodies and credit brokers to audit
the borrowers’ loan qualifications.
Ex: Lending Club, prosper
2. Marketplace P2P Lending Platforms
These lending software platforms employ intermediaries to audit and
facilitate the lenders-to-borrowers lending process. Based on predefined
lending criteria, lenders’ funds and borrowers’ loan requirements and/or
creditworthiness are matched via a usable algorithm.
when it comes to borrower selection, lenders have little to no control.
Ex: Funding Circle, Zopa

10. Types of P2P Lending Software
1. Hybrid P2P Lending Platforms:
The Hybrid P2P lending platform borrows its features from both Direct P2P
and Marketplace P2P software platforms. Here, features like loan servicing
and automated matching (loan terms to borrowers’ qualification) are visibly
pronounced and lenders have control over borrower selection.
Customization and convenience are key attributes in Hybrid P2P lending
platforms.
Ex: Peerform, Upstart

11. Threats to P2P Lending Platforms
1. Fraud and Identity Theft :
Fraudulent activities like phishing attempts, falsified loan applications,
and fake borrower identities can make a P2P lending platform
vulnerable.
If the lending platform’s security measures are exploitable, fraudsters
may take advantage of such vulnerabilities and lead to both lenders
and borrowers incurring losses.

12. 2. Default Risk :
Individuals and businesses that seek financial loans
from P2P lending platforms have varying
creditworthiness scores. Therefore, if these borrowers
default on their agreed-upon loan repayment plans, the
lenders can incure major financial losses.
Robust risk mitigation and credit evaluation strategies
are essential in assessing and managing P2P lending
platforms.

13. 3. Regulatory Challenges
The importance of adhering to legal and regulatory requirements
for Peer-to-Peer (P2P) lending platforms. As these platforms,
which enable individuals and businesses to lend and borrow
money directly from each other, operate within a complex
regulatory environment.
The key regulatory areas include:
01) Data Privacy: Platforms must safeguard the personal and
financial information of their users, adhering to data privacy laws to
protect user confidentiality.

14. 3. Regulatory Challenges
Anti-Money Laundering (AML): P2P lending platforms must have mechanisms in place
to detect and prevent money laundering activities, ensuring that their services are not
misused for illegal financial transactions.
Consumer Protection: Regulations are in place to protect the interests of borrowers
and lenders using these platforms, ensuring fair and transparent lending and borrowing
practices.
Licensing Regulations: P2P lending platforms often require specific licenses to operate
legally in a particular jurisdiction. Failure to meet these regulatory requirements or
adapt to changes in regulations can result in various challenges. These challenges may
include limitations on how the P2P lending platform can function or financial penalties
for non-compliance.

15. 1. Cybersecurity Threats
Continuous P2P lending operations lead to the storage and processing of
cumulative data in the form of sensitive personal and/or financial
information.
Experienced Cybercriminals might have the skill set to access and
compromise such invaluable data via unethical system penetration
techniques like ransomware attacks.
Successful unauthorized access to a P2P lending system compromises its
present data. Cybersecurity threats disrupt P2P lending operations by
shuttering user trust and down-voting the system’s reputation.

16. Conclusion
P2P lending software has transformed the financial industry, offering
alternative lending and investment opportunities.
Entrepreneurs and investors interested in this space should first grasp
the different types of P2P lending platforms and be aware of the
challenges they may encounter.
The ongoing evolution of P2P lending software is reshaping the
financial landscape by facilitating efficient access to capital for
individuals and businesses.

17. Conclusion
P2P lending promotes financial inclusivity by democratizing access to
loans and investments, benefitting a wide range of borrowers and lenders.
The industry's growth underscores the importance of staying informed
about emerging P2P lending trends and regulations for those considering
participation.
Overall, P2P lending software plays a significant role in expanding financial
access and choice, making it a noteworthy driver of change in the financial
sector.

18. Top 10 Peer to Peer (P2P) Lending Platforms in India
● LenDenClub
● Liquiloans
● Finzy
● Faircent
● Lendingkart
● i2ifunding
● i-Lend
● Rupee Circle
● Paisa Dukaan
● Cash Kumar
● Lend Box

19. LenDenClub:
● Business Model: LenDenClub connects individual borrowers in need of personal
loans with individual lenders willing to lend money.
● Revenue Generation: The platform generates revenue by charging fees to borrowers
and lenders, including registration fees and a percentage of the interest earned by
lenders.
Liquiloans:
● Business Model: Liquiloans focuses on providing personal loans to borrowers.
● Revenue Generation: Liquiloans earns revenue through interest on the loans
disbursed to borrowers.
Finzy:
● Business Model: Finzy connects borrowers seeking personal loans with individual
lenders.
● Revenue Generation: Finzy generates revenue by charging fees to borrowers and
lenders, including loan processing fees..

20. Faircent:
● Business Model: Faircent connects individual borrowers with individual lenders
on its platform.
● Revenue Generation: Faircent earns revenue by charging fees from both
borrowers and lenders, including registration fees, loan listing fees, and a
percentage of the interest earned by lenders.
Lendingkart:
● Business Model: Lendingkart primarily provides working capital loans to small
and medium-sized enterprises (SMEs).
● Revenue Generation: Lendingkart generates revenue through the interest charged
on the loans it disburses to SMEs.
i2iFunding:
● Business Model: i2iFunding focuses on unsecured personal loans.
● Revenue Generation: i2iFunding charges fees from both borrowers and lenders
for loan facilitation, including loan processing fees.

21. i-Lend:
● Business Model: i-Lend connects borrowers in need of personal loans with
individual lenders.
● Revenue Generation: The platform generates revenue through fees charged to
borrowers and lenders for loan processing and facilitation.
Rupee Circle:
● Business Model: RupeeCircle connects lenders with borrowers for various loan
purposes, including personal loans.
● Revenue Generation: RupeeCircle earns revenue by charging fees from both
borrowers and lenders, including loan processing fees.
Paisa Dukaan:
● Business Model: Paisa Dukaan provides short-term and long-term loans.
● Revenue Generation: Paisa Dukaan earns revenue through interest charged on the
loans it disburses.