Finshots Daily Is peer-to-peer lending set for a crash?
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Dec 11, 2024 The podcast explores the challenges confronting peer-to-peer lending in India. It delves into the Reserve Bank of India's new regulations designed to address rising non-performing assets. Experts discuss the implications of these rules and evaluate the sustainability of the P2P lending model. Listeners gain insight into the future of this financial landscape as it navigates regulatory hurdles.
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P2P Lending's Initial Appeal
- P2P lending platforms initially offered a streamlined alternative to traditional loans.
- They promised quicker processing, less paperwork, and no collateral requirements.
Risky Practices in P2P Lending
- Some P2P platforms adopted risky practices like promising guaranteed returns and instant withdrawals.
- This attracted borrowers seeking easy loans and blurred the lines between P2P platforms and NBFCs.
Loan Pooling and Defaults
- Some platforms engaged in loan pooling, bundling loans and selling them to lenders.
- They profited from the interest rate spread but faced losses when borrowers defaulted.