India peer-to-peer lending market is establishing itself as mainstream financial channel. This growth is driven by rising digital accessibility and growing borrower demand for underserved segment. As of 2025, over 30 RBI-registered NBFC-P2P platforms are operating in India. This enables direct lending between individual investors and borrowers without traditional banking intermediation. The market is dominated by strong millennial and Gen Z user base as these segments are often underserved by formal credit systems. The penetration of digital lending in semi-urban and rural areas are further accelerating the demand for peer-to-peer lending platforms. Moreover, regulatory policies are playing important role in growth of peer-to-peer lending market.
What’s Driving Peer-to-Peer Lending Market in India?
- The widespread adoption of smartphones and high-speed internet has made digital lending products accessible to over half of India’s population. As of early 2024, India had approximately 886 million internet users, representing a 58% penetration rate. Fintech companies are leveraging technologies like artificial intelligence (AI), big data, and blockchain to streamline the lending process, making it more secure and efficient.
- India’s Micro, Small, and Medium Enterprises (MSMEs) sector, comprising over 64 million enterprises, faces a substantial credit gap of ₹20–25 lakh crore. P2P lending platforms have emerged as vital alternatives to conventional financial intermediaries, offering direct connections between lenders and borrowers, particularly in underserved and unbanked regions.
- The Reserve Bank of India (RBI) has implemented regulations to enhance transparency and ensure that lenders are fully aware of the risks involved. As of May 2024, there are 26 registered NBFC-P2P platforms operating under RBI’s guidelines. These measures aim to enhance transparency and ensure that lenders are fully aware of the risks involved.
Competitive Landscape
The India Peer-to-Peer Lending market is moderately fragmented with few major players including Faircent, Lendbox, and IndiaP2P dominating the landscape. Faircent is one of India’s oldest and most trusted P2P platforms. As of late 2024, the company reported facilitating over ₹2,000 crore worth of cumulative loans, with more than 150,000 active registered lenders. Lendbox focuses on high-yield credit products and salary-linked lending options. Lendbox continues to attract HNIs by offering structured products and debt servicing tools via embedded partnerships with digital wallets like MobiKwik. Meanwhile, IndiaP2P has distinguished itself by targeting underserved rural borrowers, especially women-led micro-enterprises. It operates with one of the lowest investment thresholds in the market—₹5,000 minimum, with advertised annualized returns of up to 16–18%.
Rising Delinquency Rates and Investor Trust Deficit
The India peer-to-peer lending market is facing a major challenge of sharp increase in loan defaults and the resultant erosion of investor trust, particularly in the wake of rapid expansion and regulatory tightening. According to data from the Reserve Bank of India and media reports, the non-performing assets (NPAs) in the P2P sector crossed ₹1,163 crore in FY24, a substantial jump from approximately ₹620 crore in FY22. This more than 85% increase in defaults has triggered concerns about platform-level underwriting standards and borrower risk profiling. These restrictions have led to reduced investor confidence and a withdrawal of liquidity from the sector, particularly among first-time and retail lenders who were initially lured by high-return promises.
Future Outlook
The India peer-to-peer lending market is set for significant transformation, influenced by technological advancements, regulatory developments, and evolving consumer behaviours. India’s digital lending sector, is expected to experience substantial growth, driven by increased internet penetration and smartphone usage. The demand for alternative financing solutions is expected to rise, particularly among small and medium-sized enterprises (SMEs) and underserved populations, positioning P2P lending as a vital financial tool. The P2P platforms are expected to adopt artificial intelligence (AI) and machine learning algorithms to enhance credit risk assessment, borrower-lender matching, and fraud detection, thereby improving operational efficiency. Efforts towards standardizing operational procedures and compliance requirements will streamline P2P lending operations and facilitate industry growth.
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