
Peer-to-peer (P2P) lending, which the Reserve Bank of India (RBI) began regulating in hopes of lowering interest rates, is now adjusting its products to comply with regulatory constraints. Major consumer-focused fintech apps and P2P lending startups have modified their original product offerings to align with the regulator's requirements. For instance, Cred has launched tenure-based investment products and raised the minimum investment threshold for Cred Mint.
Background: P2P lending startups collaborated with large consumer apps to attract both lenders and borrowers. The RBI flagged these partnership structures during its audits, instructing platforms to prevent borrowers and lenders within the same company from transacting with each other. The central bank also noted that liquid funds did not comply with regulatory limits.
Industry Impact: As a result, P2P lenders halted instant withdrawal products earlier this year. They have since restructured their partnership models and scaled back some collaborations. Lendbox created a separate entity, Per Annum, to offer fixed investment opportunities. LenDenClub has reduced its business activities, with its assets under management (AUM) decreasing by nearly 50% over the past year. Liquiloans is now engaging investors through offline channels to maintain business volumes.
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