What is P2P Lending:

General definition:

Peer-to-peer (P2P) lending is a Practice of lending/investing or borrowing money from one private individual (“P2P Lender”) to another private individual (“P2P Borrower”).

The method:

It is a method of debt financing that enables individuals to borrow and lend money without the use of an official financial institution as an intermediary. Also known as “social lending”, lets individuals lend and borrow money directly from each other. Just as eBay removes the middleman between buyers and sellers, P2P lending companies eliminate financial intermediaries like banks and credit unions.

P2P lending boosts returns for individuals who supply capital and reduces interest rates for those who use it.

About Investment:

Peer to Peer lending is a financial innovation which connects verified borrowers seeking personal loans with investors looking to earn higher returns on their investments. Registered borrowers are listed on the P2P lending platform, Investors can see all the details about the borrowers before lending money to them. Investors have the option to lend small amounts to multiple borrowers to diversify their investments.

Peer to Peer Lending is already a hugely successful model for alternate financing across globe. In India, P2P Lending is gaining traction at very fast pace and slowly becoming a very attractive investment option for investors. RBI has already taken a cognizance of this innovation and come up with regulations for the sector.