Bad loans in P2P more than doubles to Rs 1,163 cr in FY24: Report

RBI tightened its guidelines for P2P lending in Aug, flagging regulatory violations by some platforms

Bad loans in the peer-to-peer (P2P) lending industry more than doubled in financial year 2024 (FY24) to Rs 1,163 crore from Rs 472.1 crore in FY23, said a financial services company on Monday.

 

Non-performing assets (NPAs), as such loans are officially called, were a modest Rs 14.7 crore at the end of FY19 when P2P lending was in its nascent stage, according to Capitalmind Financial Services that accessed data from the Reserve Bank of India (RBI) through a right to information application.

 

NPAs comprise more than 17 per cent of the total lending in the sector, said Capitalmind.

 

 

The data on rising NPAs comes after the RBI flagged regulatory violations by the P2P lending platforms of some non-banking financial companies (NBFCs).

 

“The current crisis underscores the need for a balanced approach to regulation – one that protects stakeholders without stifling the industry’s potential to bridge India’s vast credit gap. The RBI’s efforts to enforce discipline and transparency are steps in the right direction, but further collaboration between regulators and industry participants is essential,” said Capitalmind in a release.

 

NBFCs' P2P platforms provide an online marketplace for participants, which includes individual lenders and borrowers. Individuals can view details about borrowers before lending them capital. Major platforms include LenDenClub, IndiaP2P and 12% Club.

 

The RBI tightened its guidelines for P2P lending in August, saying that some platforms were promoting such loans as investment products, offering liquidity options, and functioning as deposit-takers and lenders, rather than merely acting as intermediaries.

 

Revised guidelines mandated that funds transferred into the lenders’ and borrowers’ escrow accounts should not remain there for more than T+1 days, where T refers to the date on which the funds are received.

 

In November, companies said that they were conducting pilots or had completed the implementation of the T+1 guideline ahead of the November 14 deadline, which mandated firms to clear funds in escrow accounts within one day.