What is P2P Lending ?

Recently P2P lending is much in news after RBI revised the policy with Rs 50,000 maximum cap. What exactly is the P2P lending ?  P2P lender simply brings lenders and borrowers together on a common online platform so that they can transact with each other.

P2P lending is a type of debt financing that allows individuals as well as businesses to borrow money online. Under P2P lending there is no provision of official financial institution as an intermediary. Registration to lending and assessment of customer Networh are completely done online. It refers to unsecured lending that happens on online platforms, without the involvement of a bank or a finance company. 

RBI defines P2P lending as a form of crowdfunding that entails issuing unsecured loans to borrowers via an online portal.

Crowdfunding is the process, in which people from different regions come together as in case of online platform like Kickstarter and Indiegogo, where project owner take the help of these portal to raise the money for funding a project or startup.

In peer-to-peer funding, borrowers confer with individual lenders directly to acquire personal as well as business loans. There are many online P2P portal which are providing higher returns for lenders as well as substantially lower interest rates for borrowers than traditional banking institutions.

If you want to raise some money quickly for a business or for some personal need, but have no collateral, you can consider a P2P lending platform.