Outlook Money
P2P lending enables borrowers to get loans from individual lenders themselves, without banks or NBFCs intervening, through online intermediary platforms.
Banks borrow money by lending money from the public. In P2P lending, money is lent from private individuals who want to earn interest by lending money directly to borrowers.
Banks demand rigorous credit checking and take weeks to endorse. P2P sites use unconventional data and provide faster endorsements.
P2P levels are negotiable and potentially differential based on risk level. Bank loan interest rates are market-referenced and credit-referenced on borrowers.
Banks typically require collateral for most loans. P2P loans are unsecured, thus accessible but also riskier and more costly.
Banks are regulated by RBI. Although P2P platforms fall under RBI regulation, advanced consumer protection rules are yet to be developed.
Compiled by Priyanka Debnath