P2P platforms offer collateral-free loans to salaried as well as self-employed individuals for business expansion, marriage, medical expenses, etc. However, there are certain restrictions on the loans given on the platform. 



(i) Only clean loans can be given on P2P. 

(ii) Tenure cannot exceed 36 months with the loan amount capped at Rs 10 lakh across all platforms (This is as per regulatory guidelines). 

(iii) Only resident Indians can borrow or lend on the platform.

There is a mixed opinion among P2P players on this cap and how it can impact the already credit-starved small businesses.

“RBI wants people who are not given access to credit (by banks) are also catered to. The limit on both sides (lending and borrowing) is good in my view. We are not competing with banks and NBFCs. The purpose of P2P is to bring more people to credit. You have to get a fund partner who understands the (real) purpose,” says Vinay Mathews, Founder and COO, Faircent.com. 



Mathews, who is also VP of the Association of P2P players, is positive on RBI. “It’s a new virgin market and this (current cap) is in the interest of the people that are invested in P2P. RBI aims to build the customers in that way. For a new industry, lending side has to be taken care of. This cap is expected to increase to Rs 20-25 lakh in the next couple of years,” feels Mathews. 



P2P has the potential to become an alternative avenue for SMEs to get loans. “We have seen micro SMEs perform better than consumer loans. They are our recurring customers. They help in income generation for the economy and are a good set of borrowers for us,” Rajat Gandhi, Founder & CEO, Faircent told ET Online in an exclusive interview.

Read full story here: https://economictimes.indiatimes.com/wealth/p2p/p2p-lending-how-the-rs-10-lakh-cap-will-affect-small-businesses/articleshow/65670997.cms?adcode=P2P