P2P Lending Slowdown in India After RBI Curbs
Why in the news
India’s peer-to-peer lending industry has slowed sharply after stricter RBI regulation, with platforms such as LenDen Club, Liquiloans, Faircent and Lendbox struggling and most pausing new disbursals.
RBI actions
- June 2024: tighter guidelines banned fixed return guarantees and credit enhancement, and required T+1 settlement, which many platforms find hard to implement.
- August 2024: Liquiloans and LenDen Club fined ₹1.9 crore each for non-compliance.
Fintech partner exits
| Fintech | Move |
|---|---|
| BharatPe | Exited the business |
| Cred | Paused new investments |
| MobiKwik | Scaled back borrower and lender onboarding |
P2P platforms had relied on these partners to attract borrowers and investors.
Concerns
- An RTI reply from RBI (December 2024, filed by Capitalmind) showed bad loans of ₹1,163 crore; industry put AUM near ₹6,500 crore then.
- Secondary market exits, once a draw for investors, are hard to provide.
- The industry wants secondary exits allowed for investments made before August 2024.
Outlook
Recovery depends on regulatory clarity about secondary transactions and investor protection.
Exam angle
- Regulator: RBI; key rule terms: T+1 settlement, credit enhancement.