Summary
Most people hear about P2P lending as a source of passive income before they understand what it actually is. In this lesson of the P2P Masterclass, Anooj Mehta asks Mohan Parsuramka, COO at 1 Finance, to start from the beginning.
The definition is simple. Peer-to-peer lending is one person lending money to another who needs it. One side has surplus, the other has a requirement. What surprises most people is the shape of the transaction. It is not one lender matched to one borrower. It works more like crowdfunding, with several lenders coming together to fund a single borrower.
The money also does not move the way people assume. Nothing goes directly from a lender's bank account to a borrower's. Every rupee moves through an escrow account as part of the platform's lending process. That structure is not a formality, it creates a structured flow of funds between the two sides.
Mohan then addresses what the platform is really for. Under the RBI framework, a company must be registered as an NBFC-P2P before it can operate a P2P platform. Beyond that registration, the platform onboards both sides against defined guidelines and, crucially, underwrites every borrower.
He draws a useful line here. Indians have always lent money, usually to friends and family, out of relationship rather than return. That is different from lending through a P2P platform as an investment. The moment lending happens inside a regulated framework with the intent to earn, the borrower's background stops being a matter of trust and becomes a matter of assessment.
That leads to Anooj's closing point. A P2P platform is not simply a marketplace that introduces two strangers. It evaluates borrowers before they are listed, so choosing the right platform is the lender's first real decision.