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India’s peer-to-peer (P2P) lending industry is facing a sharp downturn as regulatory pressure from the Reserve Bank of India (RBI) curbs growth and new business activity. Over the past year, the total assets under management (AUM) across P2P platforms have fallen from around ₹10,000 crore to roughly ₹3,000 crore. Founders in the sector say lending activity has slowed dramatically, with many major players stopping onboarding of new loans, leaving the business uncertain and stagnant.
The slowdown follows an RBI push for stricter compliance after finding that some platforms were not fully following regulatory norms. In June, new guidelines were introduced that banned guaranteed returns and credit enhancement practices. In August, fines totaling ₹1.9 crore were imposed on firms such as Liquiloans and LenDen Club for non-compliance.
Partnerships between P2P lenders and large fintech apps have frayed, with companies like BharatPe exiting the space and others, such as Cred, pausing new investments. Bad loans in the P2P sector were reported at about ₹1,163 crore, and industry groups are pressing the RBI for secondary market trading and other relaxations to restore investor confidence.
