P2P Lenders Seek Relief From RBI As Stringent Norms Hit Business Viability

The peer-to-peer lending sector in India, once seen as a promising alternative credit market, is now facing severe operational and financial challenges. 

Stricter regulatory guidelines from the Reserve Bank of India (RBI) have shaken business models, disrupted partnerships, and caused a significant drop in lending volumes. Industry players are now urging the regulator to provide some relief to keep the sector afloat.

P2P Lending Industry Seeks Regulatory Easing

As per the Economic Times report, the peer-to-peer lending market, regulated since 2017, has seen its overall assets under management shrink drastically, falling over 85% from more than ₹10,000 crore a year ago to around ₹1,500 crore now.
Industry executives attribute this steep decline to RBI’s revised clarifications and tighter operational guidelines issued in August and September 2024. These measures, while intended to strengthen oversight, have strained operations and reduced the scope for sustainable growth.

Major Platforms Scale Back Or Halt Operations

Prominent players such as Faircent and Liquiloans, which had previously contributed significantly to sector growth, have largely stopped issuing fresh loans. Mumbai-based LenDenClub, after almost a year of compliance adjustments, has restructured its operations and is now attempting a gradual scale-up.

Meanwhile, IndiaP2P, with exposure to the microfinance sector, is facing repayment stress as borrowers struggle to meet obligations.

Rising Loan Delinquencies Add Pressure

The slowdown in new disbursements has also led to a rise in overdue accounts. According to industry estimates, loans overdue by more than 90 days now constitute about 20% of the total.
Founders note that certain revised guidelines have made routine operations more difficult, including increased costs from processing payments that are often returned.

In some cases, if ₹7.5–₹8 crore is committed daily, nearly ₹3–₹4 crore gets returned, creating a significant operational expense.

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Conclusion 

Several P2P lending firms are actively engaging with the RBI to present the industry’s concerns. Their primary goal is to seek relaxations that can make operations viable again, restore partnerships with fintech collaborators, and stabilise lending volumes. Whether these appeals result in a regulatory shift will be crucial for the future of the sector.

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