P2P Lending

Crowdfunding raises small amounts of money from a large number of people through an online platform, for a specific project or business. Some of that money is a donation; some of it, for a commercial venture, is a loan or an equity investment.

The workbook's own definition (section 7.1.2) draws the line for the loan side: "Loans sought through crowdfunding are known as 'Peer-to-Peer Lending' or 'P2P Lending' which fall under the regulatory purview of the RBI."

That last clause is the point worth remembering. A P2P platform is not a mutual fund, an AIF or a broker — it sits under a different regulator entirely.

A P2P platform is the technology intermediary that connects "fund seekers with potential investors/donors" (section 7.1.2). It does not lend its own money; it matches individual lenders to individual borrowers and takes a platform fee for the service.

The workbook places P2P lending as one branch of crowdfunding, distinct from:

Regulatory purview is the crux: P2P lending "fall[s] under the regulatory purview of the RBI," while SEBI's own interest — recorded in a SEBI consultation paper dated 17 June 2014 — has been in crowdfunding for start-up equity and social causes, and it flagged the risk of exposing retail investors to early-stage financing with no standardisation of disclosures. The AIF workbook does not itself set out RBI's NBFC-P2P lending caps or tenure rules — that detail sits with a banking-regulation paper, not this one.

Illustrative, following the workbook's crowdfunding framework.

Rohan, a small trader in Nashik, needs Rs 3 lakh of working capital and cannot get a bank loan on the terms he wants. He lists the requirement on a P2P lending platform. Twenty-four individual lenders across India each commit Rs 12,500, funding the Rs 3 lakh in aggregate; the platform charges Rohan an origination fee and each lender a small servicing fee, and disburses the loan once it is fully subscribed.

None of the 24 lenders is an AIF or a mutual fund making a pooled investment decision — each is lending in their own name, in their own capacity, and the platform is a technology intermediary rather than an investment manager. That distinction is exactly why the activity sits with the RBI rather than SEBI: no pooled scheme, no fund manager exercising discretion, just many bilateral loans matched by a platform.

Chapter 7 (Alternative Investment Funds Ecosystem), section 7.1.2, introduces P2P lending as a branch of crowdfunding immediately before Corporate Venture Capital. The examinable point is narrow and precise: P2P lending is loans, arranged through a platform, regulated by the RBI — not SEBI, and not itself an AIF activity. A question is likely to test whether the candidate can tell P2P lending apart from equity crowdfunding and from an AIF's own pooled investment structure.

• P2P lending is regulated by the RBI, not SEBI. This is the one fact the workbook states outright, and it is the natural wrong-option bait — testing whether a candidate assumes every alternative-investment term in this paper falls under SEBI.
• A P2P platform matches bilateral loans; it does not pool money into a scheme. That is what separates it from an AIF, which invests pooled investor capital at the fund's own discretion.
• Equity crowdfunding is a different branch and is uncommon in India because of private placement restrictions under the Companies Act — do not describe P2P lending as involving equity.
• The workbook gives no RBI figures — lender exposure caps, borrower limits, platform net-worth requirements — for P2P lending in this chapter; none of those numbers should be carried into an answer from outside this paper.