NBFC-P2P lending: RBI rules and how P2P platforms earn in India

Peer-to-peer (P2P) lending means one person lends to another through an intermediary. In India, the intermediary must be a company registered with the RBI as an NBFC-P2P. It is a marketplace, not a lender. It brings lenders and borrowers together, checks the borrower, handles the paperwork and collects repayments.

The RBI created this category in 2017 with the Non-Banking Financial Company, Peer to Peer Lending Platform (Reserve Bank) Directions. Before that, the activity ran in a grey zone. Since then, a platform that wants to do it must hold a certificate of registration and follow the rules, as of November 2026.

The flow is simple on the surface, and the rules sit on the money movement.

The borrower signs up and is assessed. The platform shows the loan to lenders, who choose how much to put in, often in small slices across many borrowers. Money goes from the lender's bank account to a lenders' escrow account, then to the borrower. Repayments travel back the same way, through escrow, to each lender.

• Borrower applies and the platform checks identity and repayment ability.
• Lenders pick loans and commit amounts, often spread over many borrowers.
• Funds move from lenders into an escrow account held with a bank.
• The platform releases the money to the borrower under the agreed terms.
• Instalments are collected and passed to each lender through the same escrow route.

The RBI limits how much anyone can have at stake, so that one borrower or one lender cannot be hit too hard. These are the limits most commonly cited in the RBI directions and published summaries. Check the current text, because amounts have been revised before.

A lender who wants to go beyond the lower threshold must show proof of net worth, such as a chartered accountant's certificate.

• A lender's total exposure across all P2P platforms is capped at ₹50 lakh.
• A borrower's total borrowing across all P2P platforms is capped at ₹10 lakh.
• A single lender's exposure to one borrower, across all platforms, is capped at ₹50,000.
• Platforms must keep lender and borrower money in an escrow account with a bank, not on their own books.

In August 2024 the RBI amended the directions to tighten them after concerns that some platforms were marketing loans like safe investments. As summarised in law firm and industry notes, the changes cover several points, and a reader should confirm each against the RBI text.

The common thread is that a platform is an intermediary and may not behave like a lender or a deposit taker.

• No assured or minimum returns: a platform cannot promise lenders a fixed return or promote the loan as a product with guaranteed income.
• No credit enhancement or guarantee: the platform cannot give a first-loss guarantee or otherwise take on the risk of the loan.
• Faster fund flow: money should not sit idle in escrow, and funds are passed on within a short, set time.
• Restrictions on how the platform describes and links products, including limits on cross-selling financial products alongside lending.

The platform earns from its role, not from the interest on the loans. The main lines are an origination or processing fee charged to the borrower, a fee on the lender, a servicing or collection fee on repayments, and fees for late payments, within what the rules allow.

Because the platform cannot guarantee returns, its income depends on volume. More loans placed means more fees. That makes borrower quality and collections important, since defaults upset lenders and hurt future volume.

Start with the registration. The platform should hold an RBI certificate of registration as an NBFC-P2P, and its name should appear in the RBI's list of registered companies. A platform that only says it is peer to peer on its website, without that certificate, is not following the framework.

Then look at how the platform treats loss. The rules bar it from promising returns, so marketing that talks about safe or fixed income deserves a second look. Ask how many borrowers a typical lender spreads across, because spreading is the main tool a lender has. Ask for the default and recovery numbers by loan batch, and check who verifies them.

Finally, look at the money trail. Lenders' money should move through an escrow account and not through the platform's own current account. The 2024 changes aimed at exactly this point, so a platform that keeps balances idle is a warning sign.

A lender can lose part or all of the money. A borrower on a P2P platform is often someone with a thin credit history, so defaults can be higher than at a bank. The platform may help with collections, but it does not repay the lender if the borrower does not.

Borrowers face a different set of risks. Charges and interest can be high, and a missed payment is reported and can hurt the credit record. Reading the full fee list before signing matters.

A regular NBFC lends its own money, takes the risk and earns the interest. An NBFC-P2P does none of those things. A related tool in digital lending is the first loss default guarantee (FLDG), where a partner covers a share of a loan portfolio's losses. NBFC-P2P platforms are not allowed to offer credit guarantees in this way.

So when a headline says a lending startup raised money, check whether it is a P2P platform, an NBFC, or a lending-service provider working with a bank. The rules, the risks and the business model differ. This page is general information and not legal or investment advice, so speak to a professional before lending or setting up a platform.

P2P lending sits between investing and lending, and that blurs the line for ordinary people. A retail lender may see a platform page full of interest rates and treat it like a fixed deposit, when it is really a string of unsecured loans to individuals. The regulator's worry is that people take on risk they do not fully understand.

The RBI's answer has been to keep the platform in the role of a marketplace, to cap what each person can put in, and to insist on clear risk warnings. For founders, this means the business grows through trust and volume, not through promises. For readers of funding news, it means a P2P company that raises money is raising it for technology and operations, not to lend from its own balance sheet.

As always, this page is general information. Speak to a professional before lending or building a platform.