Get to know P2P Lending
Peer-to-peer lending, also abbreviated as P2P lending, is the practice of lending money to individuals or businesses through online services that match lenders with borrowers. It is one of the most innovative financial products of recent times.
The P2P lending companies operate with lower overhead and provide their services at lower costs than traditional financial institutions. As a result, lenders can earn higher returns compared to savings and investment products offered by banks, while borrowers can borrow money at lower interest rates.
Evolution of P2P Industry
The first P2P lending company was founded in February 2005 in United Kingdom. Gradually it became popular in the entire Europe, United Stated and other parts of the world.
The Reserve Bank of India was proactive and prompt in introducing regulatory guidelines for the P2P sector in India. In October 2017 it made obligatory for all the P2P entities to procure an NBFC P2P License to protect the participant’s interest.
The inclusion of the sector into the ambit of a regulatory framework brought higher transparency, stability, awareness and credibility to P2P lending.
The future of the P2P lending sector in India is bright. With a *CAGR of 21.6%, the P2P lending market is predicted to reach $10.5 billion by 2026.