You may lend up to ₹50,00,000 across all P2P platforms put together, and no more than ₹50,000 to any single borrower. Those caps come from the RBI’s Master Directions for NBFC-P2P platforms. They exist because the regulator treats P2P as lending, not investing. That distinction is the whole subject. If a borrower does not repay, the loss is yours alone, and no platform is allowed to make it good.
The limits the RBI sets on P2P lending
| Rule | Figure | Applies to | Source |
|---|---|---|---|
| Total you may lend across all platforms | ₹50,00,000 | Each lender | Para 7(2) |
| Net worth certificate needed above | ₹10,00,000 lent, needs a CA certificate of ₹50,00,000 net worth | Each lender | Para 7(2) |
| Total a borrower may take across platforms | ₹10,00,000 | Each borrower | Para 7(3) |
| Your exposure to one borrower | ₹50,000 | Lender to borrower | Para 7(4) |
| Longest loan tenure allowed | 36 months | Every P2P loan | Para 7(5) |
| Time money may sit in escrow | T+1 day | Platform | Para 9(ii) |
| Minimum net owned fund of the platform | ₹2 crore | The NBFC-P2P | Para 5(1)(iii) |
Source: RBI Master Directions, Non-Banking Financial Company — Peer to Peer Lending Platform (Reserve Bank) Directions, 2017, page last updated 27 February 2025.
What is P2P lending, and who regulates it?
A P2P platform matches people who want to lend with people who want to borrow. It is registered with the RBI as an NBFC-P2P. It is a marketplace and nothing more. Under paragraph 6 it may not raise deposits, may not lend on its own, and may not hold lenders’ funds on its own balance sheet.
Most importantly, it “shall not provide or arrange any credit enhancement or credit guarantee”. It cannot take on credit risk. That single line is why P2P is not a fixed deposit with a better rate, however the marketing reads.
Why P2P returns are not a rate
An advertised P2P return is a gross yield before defaults. Your actual return is that yield minus the loans that go bad, minus platform fees. Nobody can tell you the first number in advance.
The RBI has been direct about this. Paragraph 12(2) bars platforms from promoting P2P as an investment product. It names the tricks: “tenure linked assured minimum returns, liquidity options, etc.” Several Indian platforms did exactly that before 2024. If a platform still shows a fixed percentage next to a withdraw-anytime button, treat it as a warning.
Where do I find the real default rate?
On the platform’s own website, because the RBI requires it there. Every NBFC-P2P must publicly disclose its “portfolio performance including share of non-performing assets (NPAs) on a monthly basis”. It must also show the “losses borne by the lenders on principal or interest or both”.
So the number exists and it is mandatory. Find it before you fund anything. If it is buried, stale, or missing, that tells you what the platform thinks of the number. We do not publish sector-wide P2P default rates here because there is no audited aggregate to publish. Read each platform’s own monthly disclosure instead.
The platform must also give you the borrower’s identity with consent, its own credit score for that borrower, and the full loan terms. Read those. You are underwriting the loan, not buying a fund.
Where does my money actually sit?
In escrow accounts run by a trustee, not with the platform. Funds may not stay in escrow beyond T+1 day, a tightening that took effect on 15 November 2024. Money should therefore move from your account to the borrower quickly, or come back. Idle balances sitting on a platform for weeks are not how the rules intend it to work.
Who should not lend on a P2P platform?
Anyone whose money is needed within three years. Anyone treating it as a savings substitute. Anyone who cannot lose the whole amount without changing their plans. The platform must make you declare that you understand the “likelihood of loss of entire principal” before you lend.
If you want a fixed return with the credit risk taken by someone else, that is a different product. Compare a bank fixed deposit, government securities or RBI floating rate bonds. All three are lower yielding and none pretend otherwise.
Frequently asked questions
Is P2P lending safe in India?
It is regulated but not protected. The platform is an RBI-registered NBFC-P2P, so its conduct is supervised. Your money is not. There is no deposit insurance and no guarantee, because paragraph 6 forbids the platform from providing one. Losses fall entirely on the lender. Treat it as unsecured lending, which is what it is.
How much can I invest in P2P lending?
Up to ₹50,00,000 across all P2P platforms combined. Cross ₹10,00,000 and you must give the platform a certificate from a practising chartered accountant confirming a minimum net worth of ₹50,00,000. Within that, you may not have more than ₹50,000 outstanding to any one borrower.
Can I withdraw my money from a P2P platform anytime?
No. Your money is lent out for a fixed term of up to 36 months, and it returns as the borrower repays. Any product offering instant liquidity on P2P loans is doing something the RBI has told platforms not to promote. Read paragraph 12(2) before you rely on a withdrawal button.
How is P2P lending income taxed?
Interest earned on P2P loans is income from other sources and is taxed at your slab rate. There is no special rate and no indexation. Defaults are not a straightforward deduction against that interest either, so your tax can exceed your economic return in a bad year. Ask a chartered accountant before you scale up.
What happens if the P2P platform shuts down?
Your loans do not disappear, because the platform never owned them and never held the money. In practice, recovery becomes much harder without the platform’s collection machinery. Ask what the business continuity plan says before you lend, and check how long the platform has held its RBI registration.
Sources
- Reserve Bank of India, Master Directions — Non-Banking Financial Company — Peer to Peer Lending Platform (Reserve Bank) Directions, 2017, page last updated 27 February 2025. Primary.
Related reading: best personal loans, the borrower’s side of this market. Also what affects a credit score, which is what P2P underwriting scores.
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