Only 26 P2P Lending Apps Are RBI-Registered. How to Start One?

Out of the many P2P lending apps in India, only 26 are RBI-licensed. That number highlights an important point for fintech founders: launching a P2P lending platform involves much more than building an app that connects borrowers with lenders.

India’s P2P lending ecosystem is growing as technology makes it easier to connect people seeking credit with potential lenders. But unlike a regular fintech marketplace, a P2P lending platform operates within a specific regulatory framework set by the Reserve Bank of India (RBI).

To legally operate a P2P lending business, a company must obtain a Certificate of Registration from the RBI as an NBFC-P2P and meet the applicable requirements around capital, technology, governance, fund flows, and compliance.

So, what does it take to start a P2P lending business in India?

Understanding the regulatory requirements before investing in technology or operations is critical. From eligibility and the P2P Lending License process to platform infrastructure, operational restrictions, and ongoing RBI compliance, each element needs to be built into the business model from the start.

What Is P2P Lending?

P2P lending, or peer-to-peer lending, is a digital lending model that connects borrowers looking for credit with individuals or entities willing to lend through an online platform. Instead of borrowing directly from a traditional bank or financial institution, borrowers can access funds through a platform that facilitates the interaction between both sides.

In India, P2P lending platforms operate under the Reserve Bank of India’s regulatory framework for NBFC-P2Ps. The platform acts as an intermediary by onboarding borrowers and lenders, carrying out the required due diligence, facilitating loan documentation, matching participants, and supporting the movement and repayment of funds through the prescribed mechanism. The platform itself does not lend its own money or assume the credit risk of the loans it facilitates.

P2P Lending Platform Business Model

A P2P lending platform connects people who want to borrow money with people willing to lend. Unlike a traditional lending NBFC, an NBFC-P2P cannot lend its own money or take the credit risk of the loans it facilitates.

The platform earns revenue by charging fees for permitted services. These fees must follow a clear pricing policy and should be disclosed to lenders and borrowers upfront.

The business typically involves four parties: the borrower, lender, P2P platform and escrow account. The platform handles participant onboarding, borrower assessment, lender-borrower matching, loan documentation, and repayment processes. Funds move through the required escrow mechanism rather than being held as the platform's own funds.

The key point is simple: a P2P platform earns by facilitating lending, not by lending money itself. The business model, technology, and fund flows must all comply with the RBI's NBFC-P2P framework.

Do You Need a P2P Lending License in India?

Yes. A company cannot start or operate a P2P lending platform without obtaining a Certificate of Registration from the RBI as an NBFC-P2P. The RBI framework specifically provides a registration process for companies seeking to undertake this activity.

This is why founders should not treat a P2P platform as just another technology startup. The technology is only one part of the business. The regulatory structure, capital, governance, fund flows, risk controls and compliance framework must be designed before the platform goes live.

Who Can Apply for a P2P Lending License?

Before applying for a P2P Lending License, a founder needs to ensure that the proposed company meets the RBI's basic eligibility requirements. The applicant must be an Indian company with the required capital, suitable management, adequate technology and a viable business plan.

The key requirements:

• The company must be incorporated in India.

• It must have Net Owned Funds of at least ₹2 crore, or a higher amount if specified by the RBI.

• The promoters and directors must meet the RBI's fit and proper criteria.

• The company must have adequate entrepreneurial, managerial, and technological resources.

• It must have a robust and secure IT system to support the proposed P2P lending operations.

• The company must have a viable business plan and an operating structure that is not against public interest.

The RBI also evaluates the overall financial and managerial strength of the applicant before granting registration. Meeting the basic eligibility conditions does not by itself guarantee approval.

Minimum Capital Requirement for an NBFC-P2P

One of the first financial requirements founders need to consider is Net Owned Fund. Under the current RBI framework, a company applying for NBFC-P2P registration must have Net Owned Funds of at least ₹2 crore, or a higher amount if specified by the RBI.

This ₹2 crore is not money that the platform can lend to borrowers. An NBFC-P2P cannot lend from its own balance sheet. Its role is to facilitate lending between borrowers and lenders.

How to Get a P2P Lending License in India?

Getting a P2P Lending License in India involves multiple stages, from submitting the application to meeting the RBI's technology and compliance requirements. The process can be broadly understood as follows:

1. File the Application

The company first needs to submit its application to the RBI through the prescribed process. The application should include the required information and documents covering the company's ownership, management, financial position, proposed business model, and operations.

2. Submit the Required Documents

The applicant must provide the documents and information required by the RBI to assess its eligibility. These generally cover the company's incorporation, promoters and directors, capital, business plan, technology framework and other relevant details.

3. Receive In-Principle Approval

After reviewing the application and finding the applicant suitable, the RBI may grant an in-principle approval. This allows the company to proceed with the steps required to establish the proposed P2P lending platform.

4. Establish the Technology Platform

After receiving in-principle approval, the company needs to set up the required technology infrastructure and meet the conditions specified by the RBI. The platform should support areas such as customer onboarding, loan matching, fund flows, data security and regulatory compliance.

5. Obtain the Certificate of Registration

Once the RBI is satisfied that the company has met the applicable requirements and conditions, it may grant the Certificate of Registration to operate as an NBFC-P2P. The company can commence P2P lending operations only after meeting the applicable regulatory requirements.

Obtaining the P2P Lending License is not just an application exercise. The business needs to demonstrate that its technology, management, capital and operating framework are ready to function as a regulated P2P platform.

What Can an NBFC-P2P Do?

An NBFC-P2P is primarily an intermediary. It can provide an online marketplace that facilitates lending between participants.

It can also undertake activities such as:

• Conducting participant due diligence

• Assessing and risk profiling borrowers

• Sharing relevant borrower information with prospective lenders

• Facilitating loan documentation

• Supporting loan disbursement and repayments

• Providing recovery-related services for loans originated through the platform

These activities form part of the regulatory framework governing NBFC-P2Ps.

What Can an NBFC-P2P Not Do?

This is one of the most important sections for founders. An NBFC-P2P cannot operate like a traditional lending NBFC.

Under the RBI framework, an NBFC-P2P cannot:

• Lend from its own balance sheet

• Raise deposits

• Provide credit enhancement or credit guarantees

• Assume credit risk arising from transactions on its platform

• Hold lender or borrower funds on its own balance sheet

• Facilitate international flows of funds

• Use one lender's funds to replace another lender's funds

• Provide secured lending through the platform

The RBI has specifically highlighted concerns around P2P platforms behaving like lenders, deposit takers, or investment products rather than acting as intermediaries.

What Are the P2P Lending Limits?

The RBI framework sets specific limits on how much lenders and borrowers can transact through P2P platforms. These limits are designed to control exposure and reduce risks across the P2P lending ecosystem.

These limits should be built into the platform's technology and transaction controls so that the system can identify and prevent transactions that exceed the permitted thresholds.

Compliances for P2P Lending Platforms

Getting a P2P Lending License is only the beginning. After registration, an NBFC-P2P must follow several ongoing RBI compliance requirements to continue its operations.

Key compliances include:

• KYC Compliance: Verify and maintain the required KYC details of borrowers and lenders.

• Credit Information Reporting: Report borrower credit information to Credit Information Companies as required by the RBI.

• Fair Practices Code: Follow fair and transparent practices while dealing with customers.

• Customer Disclosures: Clearly disclose loan terms, fees, risks and other important information.

• Grievance Redressal: Maintain a proper system for receiving and resolving customer complaints.

• Data Security: Protect customer information and transaction data through appropriate security controls.

• Regulatory Reporting: Submit periodic returns and other information to the RBI within the prescribed timelines.

• Transaction Records: Maintain proper records of loans, repayments, fund transfers and other transactions.

• NPA Reporting: Monitor loan performance and report NPAs as required under the applicable regulations.

• Internal Controls: Maintain adequate governance, compliance, risk management and internal control systems.

An NBFC-P2P must also be a member of all Credit Information Companies and submit the required credit information at the prescribed intervals.

For a P2P lending business, compliance is an ongoing responsibility. The platform must have the right people, systems, and processes in place to meet these requirements after obtaining the P2P Lending License.

RBI's Post-2024 Scrutiny Makes Compliance Even More Important

The RBI revised the NBFC-P2P framework in August 2024 after observing practices that were inconsistent with the regulatory framework. These included platforms promoting P2P lending as investment products with assured minimum returns, providing liquidity options and, in some cases, functioning more like lenders or deposit takers.

The revised framework clarified several requirements around credit risk, fund transfers, lender-borrower matching, disclosures and other operational areas.

The RBI subsequently increased its scrutiny of P2P platforms. Business Standard reported in January 2025 that the regulator had sought detailed operational information from eight P2P companies, including information about fund flows, T+1 escrow compliance and marketing practices.

Common Mistakes Founders Should Avoid

Founders can face regulatory and operational problems if they treat P2P lending like a regular fintech or lending business. Some common mistakes include:

• Building the platform before understanding RBI requirements: Technology should be designed around the regulatory framework, not the other way around.

• Treating P2P lending like a conventional lending business: An NBFC-P2P cannot lend its own funds or take the credit risk of loans.

• Designing fund flows without regulatory review: How money moves between borrowers, lenders, and escrow accounts must follow the prescribed framework.

• Promising assured returns: A P2P platform cannot guarantee returns or repayment of principal or interest to lenders.

• Taking credit risk through informal arrangements: The platform should not create arrangements that effectively make it responsible for loan repayment.

• Ignoring exposure limits: Lenders and borrowers must remain within the applicable limits prescribed by the RBI.

• Treating compliance as a post-launch activity: Compliance requirements should be built into the business model and technology from the beginning.

• Underestimating data security and audit requirements: Customer data, transaction records and systems need proper security and controls.

• Leaving regulatory reporting until later: Required reports and records should be built into the platform's processes from the start.

• Assuming RBI registration is the end of the process: Registration is only the beginning. An NBFC-P2P must continue meeting RBI requirements throughout its operations.

Conclusion

Starting a P2P lending platform in India requires much more than developing a borrower and lender app. The business needs a regulatory structure, adequate capital, secure technology, compliant fund flows, appropriate risk controls, and a clear operating model.

With the RBI increasing its scrutiny of P2P platforms, founders should build compliance into the business from the beginning rather than treating it as a requirement to address after launch.

If you are planning to start a P2P lending platform in India, the first step should be to evaluate your proposed business model against the RBI's NBFC-P2P framework before investing heavily in technology or operations. A properly structured P2P Lending License application can help you establish the regulatory foundation for the platform and avoid costly changes later.