PEER-TO-PEER LENDING PLATFORMS: REGULATORY FRAMEWORK IN INDIA

Abstract

Peer-to-Peer (P2P) lending has emerged as an important component of the global FinTech ecosystem, connecting borrowers and lenders through technology-enabled platforms. In India, P2P lending provides opportunities for alternative credit access and investment while creating concerns related to credit risk, information asymmetry, consumer protection, data privacy, cybersecurity, and regulatory compliance. The Reserve Bank of India (RBI) established a dedicated regulatory framework by classifying P2P platforms as Non-Banking Financial Companies–Peer to Peer Lending Platforms (NBFC-P2P). This study critically examines India's regulatory framework, focusing on registration, permissible and prohibited activities, fund management, escrow arrangements, exposure limits, disclosure, risk management, and stakeholder protection. The study adopts a descriptive and analytical approach based on secondary data from RBI regulatory documents, official publications, academic literature, and institutional reports. The findings indicate that India's regulatory framework provides a structured foundation for responsible P2P lending, although challenges remain in regulatory compliance, investor awareness, risk communication, data governance, cybersecurity, and consumer protection. The study concludes that a proportionate, risk-based, and technology-sensitive regulatory approach is essential for sustainable P2P lending and stakeholder confidence.