Industry executives told ET that overall assets under management through non-banking financial company P2Ps have plunged more than 85% to about Rs 1,500 crore from more than Rs 10,000 crore a year ago.
The sector was first brought under RBI regulation in 2017. But in August and September 2024, the central bank issued clarifications to existing guidelines and tightened some norms. The changes, industry executives said, upended business models, disrupted partnerships with large fintech firms and forced many platforms to scale down or shut their lending operations. On March 24, ET reported that the industry had slowed to a crawl as startups struggled to adapt to the new rules.
Major players pull back
Platforms such as Faircent and Liquiloans, which until recently contributed significantly to the sector’s growth, have largely stopped issuing fresh loans, according to two people aware of the matter. Instead, they are focusing on collecting outstanding dues and servicing existing borrowers. Both companies declined to comment.
Mumbai-based LenDenClub, after nearly a year of struggling to align with the new regulatory framework, has now restructured its operations and is attempting to scale back up.
Bhavin Patel, CEO of LenDenClub, said the firm is currently disbursing about Rs 100 crore a month to 70,000-80,000 active borrowers. “We took a major regulatory hit in 2023-24. Over the last few quarters we have bottomed out. Now, in FY26, we are aiming for growth,” he said, adding that the company has severed partnerships with all fintech platforms including BharatPe.
Some other P2P firms, such as IndiaP2P, which had exposure to the microfinance segment, are grappling with repayment challenges as stress builds among microfinance institutions.
“Around 60% of repayments from the MFI sector happened through cash. That segment is showing major stress. For other loans, automatic repayment mandates were set, so we are going after collections from those borrowers,” the founder of a P2P lending firm said on condition of anonymity.
ETtechBad loans surge
With new loans not being disbursed, the share of delinquent loans has surged. The proportion of loans overdue by more than 90 days could be around 20%, according to industry estimates. Several founders said that some of the revised RBI norms have made operations extremely challenging. They are now trying to present these issues to the regulator in the hope of securing some relief.
One sticking point is the RBI’s T+1 settlement cycle mandate, which requires that any money deployed by a lender or repaid by a borrower be transferred within a day and not held in the platform’s account.
“If a borrower is seeking a Rs 1 lakh loan and 19 lenders commit Rs 90,000 cumulatively, we have only one day to source the remaining Rs 10,000. If we cannot, then the entire Rs 90,000 must be returned. This is a huge problem,” said the founder cited earlier.
On average, if Rs 7.5-8 crore is committed on these platforms daily, about Rs 3-4 crore ends up being returned, the founder added. Processing these payments, only for the money to be sent back, has become a significant operating cost for companies.
The founder of another P2P firm said the daily repayment rule has created confusion among lenders while also making the business operationally heavier. “Daily repayments have created confusion among lenders and it also makes the business operationally heavy. But regulated institutions need to strive to achieve the regulator’s vision, and that is something which has been made clear to us,” the person said.
