The Reserve Bank of India (RBI) said, through an 18 September gazette notification, that peer-to-peer lenders (P2P)—companies that provide loan facilitation services from their platform—will be treated as non-banking financial companies (NBFCs). You can read the notification here.
While the regulator’s detailed guidelines for this sector are still pending, this development means that P2P companies are now recognised by the banking regulator. You may have come across various P2P lenders that claim to give very high returns. Let us first understand what exactly is P2P lending and how it works.