Peer to Peer Lending License

India’s financial landscape is rapidly shifting toward digital platforms, and one of the most impactful innovations in this space is Peer-to-Peer (P2P) lending. This modern lending model directly connects borrowers and lenders through an online platform, eliminating traditional intermediaries like banks. As P2P lending grows, ensuring transparency, user protection, and responsible lending practices becomes essential. To regulate this ecosystem, the Reserve Bank of India (RBI) introduced the NBFC-P2P (Peer-to-Peer Lending) License, which every P2P platform must obtain before operating. 

A P2P Lending License legally authorizes a company to run a digital marketplace where individuals can lend or borrow money securely. Licensed platforms follow strict RBI guidelines related to data security, credit assessment, fund flow, and borrower transparency. This regulation helps lenders earn better returns with reduced risk and enables borrowers to access loans quickly at competitive interest rates. 

The license ensures that platforms maintain robust technology, strong compliance systems, and financial stability. It also builds trust among users and protects them from unregulated or unsafe lending apps. As digital finance continues to expand, the P2P lending license plays a crucial role in supporting safe, innovative, and accessible credit solutions across India. 

2. Attractive Investment Opportunity 

Lenders on P2P platforms earn higher returns than fixed deposits, savings accounts, and other low-risk instruments.

3. Digital Lending Boom

With UPI, eKYC, and Aadhaar-based verification, the digital lending environment has become seamless and secure. 

4. Technology Integration

AI, machine learning, and data analytics help platforms reduce risks and improve underwriting accuracy. 

5. Shift Toward Alternative Financial Models

Indians are open to innovative financial models that offer higher returns, easy access, and transparency. 

The regulatory framework for Peer-to-Peer (P2P) lending in India is governed by the Reserve Bank of India (RBI), which introduced detailed guidelines in 2017 to ensure transparency, user protection, and responsible digital lending practices. Under this framework, all P2P lending platforms must obtain an NBFC-P2P license to operate legally. RBI’s regulations focus on safeguarding both lenders and borrowers by establishing clear rules for platform operations, fund flow mechanisms, credit assessment, and data security. 

One of the core requirements is the maintenance of a minimum Net Owned Fund (NOF) of ₹2 crore, ensuring financial stability. Platforms are also required to use escrow accounts managed by banks or NBFCs for all transactions, preventing misuse of funds. RBI restricts the exposure limit for lenders to ₹50 lakh and caps the loan amount per borrower at ₹10 lakh, with a maximum tenure of 36 months. These measures help control risk and prevent over-lending. 

In addition, platforms must perform strict KYC, credit scoring, and due diligence before listing borrowers. They cannot lend from their own balance sheet or offer guarantees. Regular reporting, cybersecurity compliance, transparent disclosures, and grievance redressal mechanisms are also mandatory. Together, these regulations create a safe, trustworthy, and well-structured ecosystem for digital P2P lending in India. 

2. Minimum Net Owned Funds 

A minimum NOF of ₹2 crore is mandatory. This reflects the company’s financial stability and capability to manage platform operations. 

3. Clean Promoter Background

Promoters and directors must: 

• Have strong financial credibility 

• Maintain a positive credit history 

• Be free from criminal proceedings 

• Have relevant industry experience 

4. Proper Business Model and Structure

RBI wants platforms to demonstrate: 

• Transparent loan processing 

• Risk assessment systems 

• Revenue model clarity 

• Borrower and lender protection policies 

5. Strong IT and Cybersecurity Framework

Since the platform is completely digital, strong IT infrastructure is essential, including: 

• Secure servers 

• Encrypted databases 

• Real-time monitoring systems 

• Recovery and backup mechanisms

6. Fit & Proper Criteria

All directors and key personnel must meet RBI’s “fit and proper” criteria, ensuring competence and integrity. 

Promoters/Directors Documents 

• PAN, Aadhaar, Passport 

• Income tax returns 

• Credit score reports 

• Net-worth certificate 

• Experience certificates 

• Address and identity proofs 

Financial Documents 

• Latest audited financial statements 

• Bank statements 

• Proof of NOF compliance 

Business and Technical Documents 

• Detailed business plan 

• Platform architecture 

• Credit assessment model 

• IT system flowchart 

• Data privacy policy 

• Risk management policy 

• Outsourcing and vendor policy 

• Grievance redressal mechanism 

• KYC and AML policy 

Helios Global helps prepare all these documents professionally to ensure compliance and smooth approval. 

The licensing process is multi-stage and involves scrutiny from the RBI. Below is the stepwise process: 

Step 1: Company Incorporation 

Register the business as a Private Limited or Public Limited Company with the Ministry of Corporate Affairs. 

Step 2: Maintain NOF of ₹2 Crore 

Ensure the balance sheet reflects a minimum net owned fund of ₹2 crore. 

Step 3: Prepare Documentation 

Gather all necessary operational, financial, and IT documents. 

Step 4: File Application with RBI Through COSMOS Portal 

Submit the application online through the RBI’s COSMOS portal, attaching all supporting documents. 

Step 5: Physical Submission to Regional RBI Office 

After uploading, a physical set of the documents must be submitted to the concerned regional RBI office. 

Step 6: Detailed Review & Verification by RBI 

RBI examines: 

• Promoter credibility 

• Business model strength 

• Financial statements 

• IT infrastructure security 

• Governance structure 

• Risk management framework 

RBI may seek additional documents or clarifications. 

Step 7: In-Person Interview or Clarification Meeting 

Company promoters or directors may be called for detailed discussions or clarification. 

Step 8: Grant of Certificate of Registration (CoR) 

If satisfied with all aspects, RBI grants the NBFC–P2P License, allowing the company to start operations. 

Exposure Limits 

RBI has set caps: 

• One lender cannot invest more than ₹50 lakh across all platforms 

• One borrower cannot borrow more than ₹10 lakh in total 

• One lender can lend only ₹50,000 to a single borrower 

3. Prohibition on Balance Sheet Lending

NBFC–P2P companies cannot provide loans from their own funds. 

Fair Practices Code

Platforms must: 

• Disclose all charges transparently 

• Declare interest rates clearly 

• Share risk factors honestly 

Data Security and IT Compliance

Regular cybersecurity audits and IT system updates are mandatory. 

Monthly & Quarterly Reporting to RBI

NBFC–P2Ps must file periodic reports including: 

• Total loans disbursed 

• Total lenders and borrowers 

• Defaults and delays 

• Complaint status 

Annual System Audit

A certified auditor must conduct a comprehensive audit annually. 

P2P platforms earn through multiple streams:

Registration Charges

Fees for onboarding lenders and borrowers.

Loan Processing Fees

Charged on the loan amount disbursed.

Service Charges

Monthly/annual platform usage fees.

Late Payment Penalties

A portion of collected penalties is retained by the platform.

Commission-Based Earnings

Percentage of total loan transactions.

Value-Added Services

Platforms may offer: 

• Credit score improvement assistance 

• Investment advisory 

• Portfolio diversification tools 

• Insurance integration 

This multi-layered income structure makes P2P businesses highly profitable when scaled properly. 

Despite growth, certain challenges exist: 

1. Borrower Default Risk

Platforms must build strong risk assessment frameworks. 

2. High Competition

The fintech lending space is becoming crowded. 

3. Regulatory Compliance Costs

Annual audits and reporting require expertise. 

4. Technology Maintenance

Continuous IT upgrades are mandatory. 

5. Building Consumer Trust

Transparency and safety are crucial for adoption. 

The process begins with a detailed assessment of your business model, promoters’ profile, and Net Owned Funds eligibility. Our team prepares and structures all essential documents, including financial statements, IT policies, cybersecurity frameworks, operational plans, and governance manuals. We also guide you in setting up the required technological infrastructure and compliance mechanisms necessary for license issuance. 

Helios Global manages your COSMOS portal application, coordinates with the RBI Regional Office, and provides ongoing support during inspections, clarifications, and compliance reviews. We also help you implement secure escrow systems, KYC processes, and data protection practices as mandated under RBI regulations. 

From company incorporation to final license approval, Helios Global acts as your trusted partner, ensuring a smooth, accurate, and hassle-free journey towards becoming a fully compliant NBFC-P2P lending platform in India.