{"id":18014,"date":"2020-10-16T14:13:47","date_gmt":"2020-10-16T08:43:47","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=18014"},"modified":"2020-10-16T14:18:18","modified_gmt":"2020-10-16T08:48:18","slug":"p2p-lending-framework-impacts-on-indian-economy","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/p2p-lending-framework-impacts-on-indian-economy\/","title":{"rendered":"An Overview on P2P lending Framework Impacts on Indian Economy"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Peer-to-peer (P2P) is an online-based\nplatform that aims to fill the gap between individuals who can lend and those\nwho seek credit without collateral. The major transition of this industry\noccurs about two years back in the form of Reserve bank regulations which\npermits high-end investors to lend money to borrowers with a compromised fiscal\nbackground. <\/p>\n\n\n\n<p>At present, most of the P2P platforms offer credit without any collateral to the salaried as well as a business person for growth, medical expenses, and marriage, etc. One of the ways Indian fintech continues to evolve as a major player in the world of finance is to enable fintech-based lending. P2P Lending is showing a sign of future potential in the country. There is no denying that such lending transactions are one of the significant developments of the decade.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"790\" height=\"430\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-58.png\" alt=\"P2P lending Framework Impacts on Indian Economy\" class=\"wp-image-18015\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-58.png 790w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-58-300x163.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-58-768x418.png 768w\" sizes=\"(max-width: 790px) 100vw, 790px\" \/><\/figure><\/div>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/p2p-lending-framework-impacts-on-indian-economy\/#Regulations_to_Revamp_the_Financial_Landscape\" >Regulations to Revamp the\nFinancial Landscape<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/p2p-lending-framework-impacts-on-indian-economy\/#Broaden_the_Horizons_for_Steering_the_Economy\" >Broaden the Horizons for Steering\nthe Economy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/p2p-lending-framework-impacts-on-indian-economy\/#Thriving_at_a_Faster_Pace\" >Thriving at a Faster Pace<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/p2p-lending-framework-impacts-on-indian-economy\/#Significant_Aspect_of_P2P_lenders\" >Significant Aspect of P2P lenders<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/p2p-lending-framework-impacts-on-indian-economy\/#Conclusions\" >Conclusions&nbsp;<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Regulations_to_Revamp_the_Financial_Landscape\"><\/span>Regulations to Revamp the\nFinancial Landscape<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>With the country showing a wide mobile user base of around 1.2 billion in 2019 along with a focus on financial inclusion,<a href=\"https:\/\/corpbiz.io\/peer-to-peer-lending-license\"><strong>Peer to Peer lending<\/strong><\/a> has brought a major disruption in the way individuals avail loans and the role of the bank in this. With the Reserve Bank coming out with master directions related to peer in October 2017, the industry has a definite set of guidelines and regulations. The government took certain measures to revamp the financial landscape that govern this industry.&nbsp;<\/p>\n\n\n\n<p>In 1982, the Reserve Bank Governor Implement a regulatory framework that formally connects the banking sector, unorganized sector, and <a href=\"https:\/\/corpbiz.io\/nbfc-registration\"><strong>NBFCs<\/strong><\/a> to estimate the country\u2019s monetary system from a broader perspective&nbsp;<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/peer-to-peer-lending-in-india\/\">Peer to Peer Lending; Easy Lending Online Platform for Borrowers<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Broaden_the_Horizons_for_Steering_the_Economy\"><\/span>Broaden the Horizons for Steering\nthe Economy<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Accounting for the larger part of the population, this segment has been steering the economy considerably. Past economic crises and recent NBFCs issues have forced the authority and <em><strong>government<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Government\"><em><strong>[1]<\/strong><\/em><\/a><\/sup> to look for another viable alternative. P2P lending platforms exhibited the enormous potential, primarily due to cramped interest rate, user-friendly application, and swift lending decisions.&nbsp;<\/p>\n\n\n\n<p>The government further eases out the thing\nfor P2P lending by announcing 5X lending-cap extension, which was previously\nlimited at Rs 10 lakh. Considering the growing competition in this area, such\nan extension will help these platforms attract the attention of venture\ncapitalists. The government&#8217;s decision to enlarge the portfolio of credit would\nlet these platforms grow at a much faster pace.&nbsp;<\/p>\n\n\n\n<p>The Reserve Bank has suggested all Peer to\nPeer operators to hire a trustee to securitize the pattern of transactions\nbetween the escrow account of lenders and borrowers. The RBI guidelines clarify\nthat the P2P should procure at least two escrow account- one for funds coming\nfrom the lender and another one for the collections from borrowers. The account\nmust be supervised by the trustee and such an individual must be promoted by\nthe bank.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Thriving_at_a_Faster_Pace\"><\/span>Thriving at a Faster Pace<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In India, the P2P business till now depends on the development of the retail and MSME lending, which is overlooked by the financial institutions and NBFCs. The sector was a promising one and a money generator for privately held lenders, who are primarily informal lenders. On lending, it can substitute this informal lending by Reserve Bank specified entity. On the investment front Peer to Peer will cement its place in a financial market as a contemporary investment option, competing against the market-linked alternatives such as Stocks, as well as in <a href=\"https:\/\/corpbiz.io\/learning\/amendments-to-sebi-mutual-funds-regulations-1996\/\"><strong>Mutual funds<\/strong><\/a>.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Significant_Aspect_of_P2P_lenders\"><\/span>Significant Aspect of P2P lenders\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Here\u2019s why P2P lending will be the next big\nthing in the fiscal market which emerges with these significant aspects of P2P\nLenders. Those are as follows:-<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Interest Rates: Investor\nto Reap a Good Interest Rate<\/h3>\n\n\n\n<p>Interest rate is probably the most\nsignificant aspect for peer to peer lenders. The P2P platform can allow the\ninvestor to reap a good interest rate on the yearly basis. Since conventional\nsavings account doesn\u2019t offer an optimal rate of interest, many individuals\nleft with no other option than finding out a viable alternative to reap more\nbenefit of their funds, including P2P investing.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Ease of Use with User-friendly\nPlatforms<\/h3>\n\n\n\n<p>P2P platforms are user-friendly when contrasted\nwith other investment options such as shares and stocks. P2P investment\nexecutes on online platforms with minimum jargon. Anyone can get started with a\nP2P platform including those who haven\u2019t much of an experience in finance.\nAlso, P2P platforms have a diverse portfolio of the investment plan that even\nattracts the lower-income group.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Variety to Serve\nDifferent Purposes<\/h3>\n\n\n\n<p>P2P lender&#8217;s norms are less stringent than\nconventional banks. The borrowers who raise money from these platforms can use\nit to serve different purposes. This indicates that as an investor you have\nample choices for lending their capital. These loans are typically used for\nfunding small scale enterprises, housing developments, or assisting borrowers\nto broaden their property portfolio.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Diversification on Profitable Opportunities<\/h3>\n\n\n\n<p>The majority of p2p lending hub renders a\nproduct that can diversify your invested money across different profitable\nopportunities. This diversification is profitable because it lowers down your\nrisk since you are confining your funds into a single loan.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Secondary Market to Sell Parts of the Credit<\/h3>\n\n\n\n<p>While investing, you shouldn\u2019t make an\nassumption regarding exiting the investment at the initial stage. But, a\nsecondary market renders an opportunity to sell parts of the credit to other\ninvestors on the peer to peer platform. A secondary market renders liquidity to\nthe person dealing in investment if they need to avail money in advance than\nplanned.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusions\"><\/span>Conclusions&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> Scarcity of funds and limited resources are the big factor that actually decides the fate of p2p lending in India. Since conventional banks restrained borrowers from availing a loan without collateral, these platforms could prove to be a game-changer in this aspect. In case if you seek some additional view on this very topic then do not hesitate to drop the queries at the disposal of <a href=\"https:\/\/corpbiz.io\/\"><strong>CorpBiz\u2019s<\/strong><\/a> experts.&nbsp;&nbsp; <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/nbfc-peer-to-peer-lending-platform-compliance-and-registration\/\">NBFC-Peer to Peer Lending Platform \u2013 Compliance and Registration<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Peer-to-peer (P2P) is an online-based platform that aims to fill the gap between individuals who can lend and those who seek credit without collateral. The major transition of this industry occurs about two years back in the form of Reserve bank regulations which permits high-end investors to lend money to borrowers with a compromised [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":18031,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[91,1115],"tags":[1113],"acf":{"service_id":"99"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":5257,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/18014"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=18014"}],"version-history":[{"count":8,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/18014\/revisions"}],"predecessor-version":[{"id":18035,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/18014\/revisions\/18035"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/18031"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=18014"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=18014"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=18014"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}