Bad Loans in P2P Lending Double in FY24

Mumbai: Bad loans in the peer-to-peer (P2P) lending industry have more than doubled in financial year 2024 (FY24) to Rs 1,163 crore from Rs 472.1 crore in FY23, a 146 per cent rise.

According to an RTI (right to information) response to Capitalmind Financial Services by the Reserve Bank of India (RBI), bad loans in

P2P lending touched Rs 1,163 crore at the end of the financial year ended March 2024. This is a seven-times jump compared with the 2018-19 financial year when bad loans were a modest Rs 14.7 crore, a time when P2P lending was in its nascent stage, according to Capitalmind Financial Services. NPAs are estimated to be more than 17 per cent of the total lending in the sector.

Earlier this year, the RBI had flagged regulatory violations by some NBFC P2P lending platforms. It then tightened norms for NBFC P2P

lending platforms to improve compliance. While these measures aim to stabilise the sector, Capitalmind said they also present "hurdles"

that could "stifle growth and innovation."

P2P lending was introduced as an alternative to traditional banking, offering lenders attractive returns and borrowers competitive interest rates. However, borrowers, particularly in rural areas were given loans at exorbitant interest rates.