Perspectives on Business Management, Economics & Information Technology (PBMEIT) Now also covers research on Psychology

PBME Volume II ISBN: 978-81-947738-1-8

SUSTAINABILITY OF PEER TO PEER LENDING

Author(s): MONISHA DEVARAJAN & SARANYA SASIDHARAN

Abstract

Peer-to-Peer Lending (or P2P Lending or Crowdlending) has turned out to be a recent financial innovation. With close to 30 percent CAGR growth in market size, the global P2P market stands at $67.93 billion as of 2019. Peer to peer lending process connects lenders and borrowers through online lending platforms. The platform itself earns a small fee out of the transaction. Individuals who need money urgently can borrow from a pool of individuals ready to lend at a fixed rate of interest through an online platform.

This chapter explains the definition and evolution of P2P loans, particularly in the Indian context and the regulations stipulated by the Reserve Bank of India (RBI), the pros and cons of different P2P lenders. We then examine the impact of COVID-19 lockdown and restrictions on the lending practices and sustainability of the lending platforms. Secondary data from sources reported online as well as offline were used in this analysis.

Keywords: credit market, debt financing, escrow account, unsecured loans, EMI payment

JEL Classification: G23, G24, F34, F33

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