India Peer-to-Peer (P2P) Lending Market By Type (Consumer Lending, Business Lending), By Borrower Type (Individual, Small Business, Real Estate, Others), By Region, Competition Forecast & Opportunities, 2021-2031F

Market Overview

India Peer-to-Peer (P2P) Lending Market was valued at USD 16.74 Billion in 2025 and is expected to reach USD 38.18 Billion by 2031 with a CAGR of 14.78% during the forecast period. In recent years, peer-to-peer lending has become increasingly The India peer-to-peer lending market is expected to grow at a faster rate in forecasted period. The market is significantly driven by the rise of digital payments, increasing internet usage, and fueling demand for credit among consumers and small businesses. P2P lending platforms in India are using AI and ML to assess credit risk and make lending decisions. This has helped to reduce the risk of default and improve the overall efficiency of the lending process. The peer-to-peer lending market in India is a rapidly growing segment of the fintech industry. P2P lending platforms connect borrowers with investors (lenders) through an online marketplace, enabling borrowers to obtain loans at competitive interest rates and investors to earn higher returns on their investments. The high return rates in P2P lending are the main factor that is attracting Indian investors to take it up as a preferred investment choice. In 2023, retail credit disbursement by NBFCs was estimated at ₹18 trillion (USD 210 billion), with projections indicating a rise to ₹23 trillion (USD 269 billion) by 2025. This upward trend underscores the expanding role of NBFCs, including peer-to-peer (P2P) lending platforms, in shaping India’s evolving financial ecosystem.

Key Market Drivers

Increasing Digital Adoption and Internet Penetration

One of the primary drivers of the India Peer-to-Peer (P2P) Lending Market is the rapid increase in digital adoption and internet penetration across the country. India has witnessed an unprecedented growth in smartphone users and affordable internet access, especially in semi-urban and rural areas. According to Ministry of Communication, as of March 2024, India recorded 954.4 million internet subscribers—a nearly 3.8× increase from 251.6 million in March 2014, reflecting a CAGR of 14.3%. Rural subscribers stood at 398.4 million, with 95.2% of villages (over 612,952 out of 644,131) equipped with 3G/4G connectivity. This connectivity boom has allowed more individuals to access online financial platforms, including P2P lending marketplaces, which operate entirely through digital channels. Digital adoption has made it easier for borrowers who lack access to traditional banking services to connect with potential lenders directly, bypassing lengthy paperwork and cumbersome approval processes. Mobile apps and online portals provide convenience, transparency, and faster turnaround times for loan disbursal. Additionally, digital payment infrastructure like UPI and mobile wallets facilitate seamless loan repayments and collections. This widespread access is crucial because P2P lending primarily targets the underserved and unbanked population segments who face challenges obtaining credit from banks due to insufficient credit history or collateral. By leveraging technology, P2P platforms fill this credit gap by offering quick loans to these borrowers. Furthermore, digital channels help lenders diversify their investment portfolios by allowing smaller ticket sizes and easier management of multiple loans.

Supportive Regulatory Framework by the Reserve Bank of India (RBI)

Another critical factor driving the growth of the India Peer-to-Peer (P2P) Lending Market is the supportive regulatory framework introduced by the Reserve Bank of India (RBI). Recognizing the potential of P2P lending to enhance financial inclusion and expand credit access, the RBI has implemented clear guidelines to regulate P2P lending platforms. The RBI classified P2P lending platforms as Non-Banking Financial Companies (NBFCs), which brought these platforms under regulatory supervision. This classification ensured that P2P platforms adhere to strict guidelines regarding capital requirements, operational transparency, borrower and lender eligibility, and data security. Regulatory oversight has enhanced trust and credibility in P2P lending, attracting more users. RBI guidelines also mandate fair practices such as clear disclosures about risks and fees, proper borrower verification through e-KYC, and the creation of a grievance redressal mechanism. The RBI’s revised guidelines mandate P2P platforms to charge fixed, non-repayment-linked fees and route all transactions through designated escrow accounts for transparency. The RBI has also defined a cap of Rs. 50 lakhs on the aggregate exposure of any lender to all borrowers, while larger investments (exceeding Rs. 10 lakhs) will require a net worth certificate. This regulation further emphasizes the need for careful monitoring and control of risks in the lending ecosystem.

Growing Demand for Alternative Credit Solutions Among Underserved Segments

The rising demand for alternative credit solutions from underserved and credit-invisible populations is a key driver propelling the India Peer-to-Peer (P2P) Lending Market. A significant portion of India’s population remains outside the purview of formal banking due to lack of collateral, limited credit history, or geographic barriers. Traditional lenders often hesitate to provide loans to these segments because of high risk and operational costs. P2P lending platforms fill this void by offering accessible, flexible, and quick loan options to individuals and small businesses that struggle to secure credit from conventional banks or NBFCs. The loan approval process on P2P platforms is generally faster, with minimal documentation and digital KYC, making it attractive to borrowers seeking timely financial support.Micro-entrepreneurs, freelancers, and salaried individuals who require small-ticket loans for business expansion, emergencies, or consumption needs prefer P2P lending due to ease of access and customized loan terms. Moreover, these platforms often use alternative data points and AI-driven credit scoring models to assess borrower creditworthiness, enabling more inclusive lending. For lenders, P2P platforms present an opportunity to earn higher returns compared to traditional investment options while diversifying risk across multiple borrowers. This win-win dynamic between unmet credit demand and investor appetite for yield has catalyzed rapid market growth. 

Download Free Sample Report

Key Market Challenges

Credit Risk and Default Management

One of the biggest challenges facing the India Peer-to-Peer (P2P) Lending Market is managing credit risk and borrower defaults. Since P2P lending primarily targets individuals and small businesses who often lack formal credit histories or collateral, the risk of loan default is inherently high. Unlike banks, P2P platforms usually do not provide secured loans, which increases the vulnerability of lenders to non-repayment. The decentralized nature of P2P lending means that lenders directly bear the risk of borrower default, which can deter participation if the risk mitigation measures are insufficient. Platforms rely heavily on credit scoring algorithms and alternative data to assess borrower risk, but the accuracy of these models can vary, especially in an emerging market like India where comprehensive credit data is often unavailable. Managing defaults also requires efficient recovery mechanisms, which many P2P platforms struggle with due to limited resources and legal complexities. Late payments or defaults can erode lender confidence and impact platform credibility, hindering market growth. NBFC-P2P platforms must now limit a lender’s total exposure to borrowers across all such platforms to INR 5 million (approximately USD 60,000). Additionally, if a lender’s exposure exceeds INR 1 million (around USD 11,920) across multiple platforms, they are required to provide a chartered accountant’s certificate confirming a minimum net worth of INR 5 million (about USD 60,000).

Regulatory and Compliance Challenges

Despite the RBI’s efforts to regulate the P2P lending sector, regulatory and compliance challenges persist. The P2P lending ecosystem is still relatively new and evolving, and there are gaps in comprehensive policy coverage for issues such as consumer protection, dispute resolution, data privacy, and cybersecurity.P2P platforms must comply with various RBI mandates, including capital requirements, KYC/AML norms, and operational transparency. However, ensuring strict adherence to these requirements can be costly and complex for smaller or emerging players. Additionally, inconsistent enforcement and lack of a unified legal framework for P2P lending transactions can create uncertainty for both platforms and users. Moreover, the lack of a well-defined credit bureau reporting mechanism for P2P loans limits transparency and affects borrower credit scoring accuracy, which in turn affects risk management. The evolving regulatory landscape means platforms must constantly adapt to new rules, sometimes slowing down innovation or expansion. The peer-to-peer (P2P) lending sector has faced a notable slowdown between 2023 and 2025 due to stricter regulations imposed by the Reserve Bank of India (RBI). According to two industry founders, the total assets managed by P2P lending platforms have dropped sharply from about Rs 10,000 crore (USD 1.2 billion) in 2023 to roughly Rs 3,000 crore (USD 0.36 billion) in 2025.

Limited Awareness and Trust Among Users

Limited awareness and trust among potential borrowers and lenders pose a major barrier to the growth of the India Peer-to-Peer (P2P) Lending Market. Many users remain unfamiliar with how P2P lending works, its benefits, and associated risks. Traditional banking remains the default choice for most consumers, especially in semi-urban and rural areas where digital financial literacy is still low. The lack of awareness about P2P platforms leads to slow adoption and hesitation among borrowers who may be wary of online lending due to fears of fraud or misuse of personal information. Similarly, many potential lenders remain cautious because P2P lending is perceived as riskier than conventional investment options. Building trust is further complicated by a few reported cases of platform failures, fraud, or poor borrower repayment records. Such incidents create negative perceptions and reduce confidence in the sector overall.

Key Market Trends

Integration of Advanced Technologies and AI

A significant trend shaping the India Peer-to-Peer (P2P) Lending Market is the integration of advanced technologies like artificial intelligence (AI), machine learning (ML), and big data analytics. P2P platforms are increasingly using AI-driven credit scoring models to assess borrower risk more accurately and quickly. These models leverage alternative data sources such as mobile usage, social media behavior, transaction history, and digital footprints, which traditional credit bureaus often overlook. This technology-driven approach allows platforms to include borrowers with thin or no formal credit histories, thereby expanding financial inclusion. AI also helps automate loan approval processes, reduce operational costs, and improve the overall user experience for both borrowers and lenders. Additionally, ML algorithms continuously learn and improve risk prediction based on repayment patterns and borrower behavior. The use of technology is enabling P2P platforms to offer customized loan products, dynamic interest rates, and timely risk alerts. This trend also supports better fraud detection and collection efforts, enhancing trust and reliability. Overall, tech adoption is driving efficiency, reducing defaults, and scaling the market rapidly.

Growing Focus on Micro and Small Borrowers

Another emerging trend in the India Peer-to-Peer (P2P) Lending Market is the increasing focus on micro and small borrowers, including micro-entrepreneurs, freelancers, and informal sector workers. These borrower segments often face difficulties accessing credit from traditional financial institutions due to lack of collateral, unstable income, or insufficient credit history. P2P platforms have recognized this gap and are tailoring products to meet the specific needs of these underserved groups. Loan amounts are typically small and flexible, repayment schedules are designed around borrower cash flows, and eligibility criteria are adapted to non-traditional income sources. This trend is fueled by the rising gig economy, self-employment, and digital freelancers who require quick access to working capital or personal loans. By catering to this segment, P2P lending contributes significantly to financial inclusion and entrepreneurship growth in India. Furthermore, many platforms are partnering with fintech startups and microfinance institutions to expand their reach into rural and semi-urban areas. This trend highlights the democratization of credit and the shift from conventional banking toward more inclusive and accessible lending ecosystems.

Expansion of Investor Base and Diversification

A third major trend in the India Peer-to-Peer (P2P) Lending Market is the expansion and diversification of the investor base. Initially dominated by individual retail investors, the market is now attracting a broader set of investors including high-net-worth individuals (HNIs), institutional investors, and even family offices. This diversification is driven by the attractive risk-adjusted returns offered by P2P lending compared to traditional fixed-income assets like bank deposits or government bonds. As awareness grows, more investors seek alternative investment avenues to enhance portfolio yield and diversify risk. To cater to this trend, P2P platforms are innovating with features such as automated investment tools, portfolio diversification across multiple loans, and risk grading to help investors make informed decisions. Some platforms also offer secondary marketplaces enabling investors to buy and sell loan parts, adding liquidity to what was previously a relatively illiquid asset class.

Segmental Insights

Type Insights

In India’s Peer-to-Peer (P2P) lending market, consumer lending holds the dominant position compared to business lending. This dominance is driven primarily by the high demand for personal loans among individual borrowers who seek quick and accessible credit for various purposes such as education, medical emergencies, weddings, travel, and debt consolidation. Consumer loans generally involve smaller loan amounts, which align well with the P2P lending model that emphasizes micro-lending and quick disbursal. The ease of application, minimal documentation, and faster approval processes offered by P2P platforms make consumer lending especially attractive for individuals who often face delays or rejections in traditional banking channels due to rigid eligibility criteria. The convenience of digital platforms and the growing penetration of smartphones and internet access further support the expansion of consumer lending in the P2P sector. On the other hand, business lending in the P2P market remains relatively smaller due to higher perceived risks and complexities associated with lending to micro, small, and medium enterprises (MSMEs). Business loans typically involve larger amounts and require detailed credit assessments, which can be challenging for P2P platforms to manage efficiently. Regulatory challenges and concerns about repayment defaults also slow the growth of business lending in this space. Despite this, business lending is gradually gaining traction as P2P platforms improve risk assessment technologies and seek to tap into the credit needs of underserved MSMEs, signaling potential future growth in this segment. 

Download Free Sample Report

Regional Insights

The North region of India stands out as the dominant region in the India Peer-to-Peer (P2P) lending market due to several key factors driving its growth and adoption. This region includes economically vibrant states like Delhi, Haryana, Punjab, Uttar Pradesh, and Himachal Pradesh, which have witnessed rapid digitalization and rising financial literacy. The widespread availability of internet connectivity and smartphone penetration in urban and semi-urban areas of the North region has significantly boosted access to online lending platforms. Furthermore, the presence of a large and growing middle-class population with increasing disposable incomes fuels the demand for consumer credit, making the North region a crucial market for P2P lending platforms. Borrowers in this region actively seek alternative lending sources for quick personal loans, education financing, and medical expenses, especially when traditional banking services fall short due to lengthy approval processes or strict eligibility norms. The region also benefits from a growing base of tech-savvy lenders who are looking to diversify their investment portfolios through P2P platforms to earn attractive returns. Additionally, several P2P platforms have strategically focused their marketing and operations in Northern India, leveraging local partnerships and awareness campaigns to build trust and adoption. Overall, the combination of technological readiness, strong demand for credit, and growing investor interest firmly establishes North India as the leading region in the country’s expanding P2P lending market.

Recent Developments

• In 2024, IndiaP2P has launched the Monthly Income Plan-Plus to align with the RBI’s revised guidelines for NBFC-P2P platforms. This new product promotes P2P lending as a medium- to long-term investment, offering lenders up to 18% annual interest with monthly payouts of principal and interest. The RBI allows lenders to invest up to ₹50 lakh across platforms. The plan encourages risk mitigation through borrower assessment and diversified lending, reinforcing P2P lending’s role as a stable investment option.
• In 2025, Flipkart has secured a Reserve Bank of India (RBI) license to operate as a Non-Banking Financial Company (NBFC), enabling it to offer direct loans to customers and sellers on its platform. This move positions Flipkart as the first major e-commerce company in India to receive such authorization, allowing for more independent lending operations.
• Faircent, India’s first RBI-registered NBFC-P2P platform, faced a ₹40 lakh RBI penalty in 2025 for regulatory violations, including unauthorized loan disbursals and improper fund transfers. Despite this, Faircent launched Faircent Pro to collaborate with NBFCs and institutional lenders, aiming to expand its lending ecosystem and continue offering accessible credit amidst evolving regulations.
• In 2022, Faircent, India's pioneering RBI-registered NBFC-P2P platform, introduced Faircent Pro. This co-lending platform enables Non-Banking Financial Companies (NBFCs) and institutional lenders to collaborate by jointly lending to the same borrower. Leveraging advanced technologies, Faircent Pro facilitates seamless integration, allowing partners to co-lend efficiently while adhering to regulatory guidelines.

Key Market Players

• Transactree Technologies Private Limited (Lendbox)
• Fairassets Technologies Private Limited (Faircent)
• RNVP Technology Private Limited (i2ifunding)
• Bridge Fintech Solutions Private Limited (Finzy)
• Innofin Solutions Private Limited
• Lendingkart Technologies Private Limited
• Fintelligence Data Science Private Limited (RupeeCircle)
• Fair Vinimay Services Private Limited
• Etyacol Technologies Pvt. Ltd (Cashkumar)
• NDX P2P Private Limited (LiquiLoans)

Report Scope:

In this report, the India Peer-to-Peer (P2P) Lending Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• India Peer-to-Peer (P2P) Lending Market, By Type:

o   Consumer Lending

o   Business Lending

• India Peer-to-Peer (P2P) Lending Market, By Borrower Type:

o   Individual

o   Small Business

o   Real Estate

o   Others

• India Peer-to-Peer (P2P) Lending Market, By Region:

o   North

o   South

o   East

o   West

Competitive Landscape

Company Profiles: Detailed analysis of the major companies presents in the India Peer-to-Peer (P2P) Lending Market.

Available Customizations:

India Peer-to-Peer (P2P) Lending Market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).

India Peer-to-Peer (P2P) Lending Market is an upcoming report to be released soon. If you wish an early delivery of this report or want to confirm the date of release, please contact us at [email protected]