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Is P2P Lending In India Safe?

Peer to Peer (P2P) lending has become a popular alternative to traditional investments like Fixed Deposits. Read this blog to know if P2P lending in India is safe.
March 25, 2021

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Yes, Peer to Peer (P2P) lending in India is safe as long as you invest through an RBI Certified P2P NBFC like LiquiLoans or Faircent. Although there are other factors that you must consider before you become a lender on one of these platforms. 

Let’s dive into P2P lending in-depth to see the benefits, risks and understand the various regulations that are in place to ensure safety. 

What Is P2P Lending In India?

Peer to peer lending or P2P lending platforms connect borrowers to individuals or a group of lenders. These borrowers are thoroughly vetted based on their creditworthiness and other important factors.

P2P lending platforms cut out the intermediaries like conventional lenders. Usually, a borrower would go to a lender like a bank for a loan. These loans mostly have an unfavourable interest rate that most borrowers may want to avoid. 

At the same time, a loan could be the only way for the borrower to pay off student loans, credit card debt, or other such needs. In such cases, P2P lending becomes the next best alternative.     

5 Benefits Of P2P Lending In India

P2P lending could be a potential investment option that can generate passive income.

1. Potentially high returns

Historical data suggests that P2P lending may give returns of 8-14%. This is comparatively better than a bank savings a/c or FD.

2. Recurring monthly interest

P2P lending may generate passive income in the form of recurring monthly interest payments.

3. Creditworthy borrowers

Cube's P2P lending partners, Faircent and LiquiLoans, ensure that you lend to thoroughly vetted borrowers who have a high CIBIL score.

4. Low minimum starting amount

The minimum lending amount and the additional investment amount are fairly low. Download the Cube Wealth app to know more.

5. Risk-based lending options

You can select lending options according to your risk profile and goals. Cube's P2P lending partners help you distribute risk across multiple borrowers.

3 Risks Of P2P Lending In India

There are risks involved in P2P lending just like any other investment. Here are the 5 risks that lenders may face:

1. Interest payment defaults

The borrower(s) may default on their interest payments. Thus, you should rely on a leading platform like Faircent or LiquiLoans on Cube Wealth that thoroughly vet their borrowers.

2. Principal repayment defaults

There's a possibility of principal repayment default in certain scenarios. Thus, you must consult a wealth coach before investing.

3. Concentration risk

Lending a high amount to a specific borrower may be risky. However, Cube's P2P lending partners help you distribute your risk across multiple borrowers.

Most of these risks can be avoided by investing through a trusted RBI Certified P2P NBFC like LiquiLoans or Faircent with advice from a Cube Wealth Coach

7 Important RBI Guidelines For P2P Lending

The RBI has guidelines and regulations in place to ensure the safety of both lenders & borrowers. While there are many more guidelines, here's a look at the 7 most important ones that you need to know before becoming a lender or borrower on P2P platforms:

  • P2P lending platforms must become members of credit information companies and make financial data available to them.
  • P2P lending platforms cannot offer a guarantee on the loan.
  • The borrowers must be grouped according to their creditworthiness, income, etc.
  • A lender can only lend a maximum of ₹50,00,000 across all P2P platforms and borrowers at any given time. 
  • A lender must provide proof of net worth to lend more than ₹10,00,000 across all P2P platforms. The proof must be certified by a practising Chartered Accountant.
  • Borrowers can take a loan of up to ₹10,00,000 across all P2P platforms.
  • One lender can only lend a maximum of ₹50,000 to the same borrower across all P2P platforms. 


P2P lending can be a passive income generating investment that can give potentially high returns. However, it has its own risks just like any other investment that you must be aware of.

If you're investing through an app like Cube Wealth, you'll have the benefit of splitting your investment across multiple properly vetted borrowers to reduce the risk. 

Cube works with trusted RBI Certified P2P NBFC like LiquiLoans and Faircent. There are no hidden fees involved and every important fact is transparent. More importantly, you have complete control over who you want to lend to. 

Download the Cube Wealth app for free to know more about P2P lending.


Q. Which P2P lending is the best in India?

Ans. Cube Wealth gives you access to two of the best P2P lending platforms in India, Faircent and LiquiLoans. Cube's P2P partners are RBI Certified P2P NBFCs that ensure that you only lend to the best, creditworthy borrowers.

Moreover, P2P lending on Cube Wealth is an attractive asset class with historical returns between 8 to 12%. Download App For Free

Priya Bansal
Curious about personal finance and all things money. Can either find me reading a book or dancing to a tune.

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