A Brief Analysis of Peer to Peer (P2P) Lending in India

Rapidly changing technology is playing a very important role in all the spheres of human life. The financial sector is not an exception to it. In the last few years, however, innovations in IT and development of new digital tools and technologies have simplified the way consumers access banking and financial services. Peer-to-peer lending, also known as P2P lending, is one of the emerging financial products which utilises online services for lending without any intermediation of banking institution. P2P lending is a form of private lending which is not a new model; it has been in vogue since centauries. Private lending is a century old practice and initially started out as relatively simple system for the purpose of facilitating loans between individuals but with the passage of the time, with the advent of technology, it has grown into a complex economy of technology and institution. What is so unique about P2P lending is the use of Internet online platform for the lending process. Though P2P lending is in its nascent stage and credit available through it is very small in comparison to total credit disbursed through banking system, this practice has attracted the attention of public significantly across the globe. The main objective of this article is to analyses the evolution, advantages, relevance and challenges faced by P2P lending model in India. Besides, an attempt has been made to suggest few measures for its healthy and sustainable growth in years to come.