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Peer-to-Peer Lending and the Intermediary Reality 8:22 Jackson: Now, let’s talk about something that feels a bit more "crowd-powered"—Peer-to-Peer or P2P lending. This was supposed to be the great democratizer of credit, right? Connecting individual lenders directly with borrowers through a platform.
8:37 Nia: That was the dream! But the reality in India has become much more structured—and regulated—especially with the new RBI directions that came out late in 2025. The regulator basically said, "Look, you platforms are just intermediaries. You are not banks. You cannot lend on your own balance sheet, you can’t give guarantees, and you definitely can't promise assured returns."
9:00 Jackson: I noticed that. The RBI has been very clear about keeping these platforms in the "Base Layer" of regulation. They’ve even capped the aggregate exposure—a lender can only put up a maximum of fifty lakh rupees across all P2P platforms. And for a single borrower, the limit is even tighter—it’s capped at fifty thousand rupees per lender.
9:21 Nia: It’s all about risk containment. The regulator saw some platforms marketing P2P lending as an investment product with "assured returns," and they shut that down fast. They want lenders to know that they are taking the full credit risk. If the borrower defaults, the platform isn't going to bail the lender out.
9:38 Jackson: It’s a fascinating model for a small business or an individual who might be underserved by traditional banks. But for a founder looking to raise significant capital, those caps make it tricky. If you need ten lakh rupees, you have to find twenty different lenders through the platform who are all willing to take a fifty-thousand-rupee bet on you.
9:59 Nia: Right, and the platforms have to do the heavy lifting of credit assessment and risk profiling. They use AI and alternative data to figure out who’s a good bet. But even then, the interest rates can be high—anywhere from twelve to thirty percent. It’s not "cheap" money, but it’s "accessible" money.
10:16 Jackson: And the operational rules are getting intense. There’s this "T plus one" settlement rule now. Funds can't sit on the platform for more than one business day. Everything has to flow through these bank-promoted escrow accounts. It’s designed to stop the platforms from using the float to play "bank" with other people's money.
10:34 Nia: It’s a classic case of the regulator stepping in to prevent a shadow banking crisis. But for a founder, the real value of P2P might be in that speed and the different underwriting criteria. If a traditional bank says "no" because you don't have three years of audited financials, a P2P platform might look at your digital footprint and say "yes."
10:52 Jackson: But you have to be careful about the "loan stacking" issue. The aggregate limit for a borrower across all P2P platforms is fifty lakh rupees. And the platforms are now mandated to report everything to credit information companies like CIBIL. So, if you’re taking multiple small loans to stay afloat, it’s going to show up on your credit report very quickly.
11:13 Nia: It’s a transparency play. The goal is to stop borrowers from getting over-leveraged by hiding their debt across different platforms. It makes the ecosystem healthier, but it also makes it harder to "game" the system.
11:25 Jackson: It’s interesting to compare this to crowdfunding. P2P is essentially "debt crowdfunding." You’re still raising from a crowd, but you owe them interest. It’s a more transactional relationship than, say, a reward-based crowdfunding campaign where people are backing your vision.
2:35 Nia: Exactly. And the maturity of these loans is capped at thirty-six months. So it’s strictly short-to-medium-term capital. If you’re a founder, you have to ask yourself: is my project going to generate enough cash to pay back this high-interest debt within three years?
11:55 Jackson: The practical lens here for the listener is: can you handle the "fragmented" nature of P2P? Dealing with a platform that is strictly an intermediary means you’re essentially answering to a crowd of individual lenders, and your credit reputation is on the line with every single one of them.