P2P lending slows as RBI move clouds future of key players

peer-to-peer lending industry has slumped to a major slowdown with most of the large players in this space staring at an uncertain future, after the Reserve Bank of India came down heavily on the sector last year for not properly abiding by regulatory guidelines.

The P2P sector’s assets under management (AUM) have shrunk to less than Rs 3,000 crore from around Rs 10,000 crore a year back, according to two founders of P2P lending startups, who spoke on the condition of anonymity.

“There are hardly any new loans that are being done by the platforms; most of the large platforms have stopped onboarding so business is staring at a major uncertainty,” said one of the founders.

The slowdown happened after the central bank introduced stringent rules on the P2P lending platforms, which resulted in high-growth companies like LenDen Club, Liquiloans, Faircent and Lendbox finding themselves on the wrong side of regulations.

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In June, the RBI came out with guidelines on the P2P space asking platforms to abstain from guaranteeing any fixed returns or credit enhancement facilities among several other rules. In August the RBI fined Liquiloans and Lenden Club Rs 1.9 crore each for violations in following regulations.

Also Read: P2P startups look to overhaul biz, processes amidst RBI crackdown

Most of the large consumer-facing fintech partners for these P2P platforms have started winding down this business. P2P startups like Liquiloans, Lendbox and LenDen Club were working with platforms such as Cred, BharatPe and