P2P sector: P2P sector sitting on Rs 1,163 crore of bad loans: RTI filing shows

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The total bad assets in the peer-to-peer (P2) lending sector have shot up to Rs 1,163 crore as of March 2024, a Right To Information (RTI) filing with the Reserve Bank of India (RBI) has revealed.

The filing which was made by Capitalmind, a wealth management platform, has shown that the non-performing assets (NPAs) have gone up over the last five years. It was at Rs 14 crore in March 2019, going up to Rs 472 crore in March 2023 and jumping 2.5 times in the last financial year. Needless to say, the sector has grown exponentially over the last two years.

The growth was primarily driven by the likes of LenDenClub, Liquiloans, Faircent and Lendbox, which built innovative partnerships with large consumer-facing applications to source both lenders and borrowers. The likes of Cred, BharatPe and MobiKwik tied up with P2P platforms to offer cheap credit to their customers and these partnerships blossomed between 2022 and 2024.

Also Read: P2P firms dial RBI for secondary market access, instant liquidity tools

While Capitalmind asked for the total AUM of the sector through the filings, the banking regulator informed that it did not have that data. In a blog post, the wealth management firm said that that could be because P2P platforms are not supposed to have any assets under management (AUM) but rather act only as platforms to facilitate the flow of credit between lenders and borrowers.

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Capitalmind quoted media reports to say that if the industry AUM was around Rs 6,500 crore then the total non-performing assets (NPAs) of the sector would be at around 17%, which is alarming and could mean that the sector could implode.

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The RBI has been cracking down on the P2P space which was alleged to have flouted multiple regulatory norms as a sector in a rush to show quick growth. The regulator clamped down on partnership models which helped source such loans, and credit guarantees offered by these platforms for these products and also stopped any instant liquidity option for the investors.Also Read: P2P startups look to overhaul biz, processes amidst RBI crackdown



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