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# Is this wise to invest in peer-to-peer (P2P) lending to earn high returns?
- URL: https://www.clinkwealth.com/p2p-portfolio-should-you-invest-in-peer-to-peer-lending-to-earn-high-returns/
- Published: 2026-11-01T18:16:53.000Z
- Updated: 2026-11-03T09:10:17.000Z
- Author: Vimal Chander Joshi
- Tags: money, lending

If you want high returns, you have plenty of choices: stocks, mutual funds, small savings schemes, fixed deposits (FDs), sovereign bonds, corporate debt and more. There's one more option that few people talk about, though: peer-to-peer (P2P) lending.

A handful of NBFCs registered with the Reserve Bank of India (RBI) offer P2P lending to retail investors. These platforms let individuals lend small amounts to borrowers and earn high returns. The money doesn't go straight from one person to another. It sits in an escrow account first and is then passed from lender to borrower.

**How does the RBI regulate it?**

The RBI oversees the whole borrowing and lending process. It has capped what a lender can give to a single borrower at ₹50,000\. So if you want to invest ₹1.5 lakh, you'd have to split it across at least three borrowers, which spreads out the risk. A lender's (or borrower's) total exposure across all P2P platforms is also capped at ₹10 lakh.

The RBI first brought this sector under its rules in 2017\. In August-September 2024, it tightened the norms, and several platforms scaled back or shut down as a result.

Diversification is one of the most useful things P2P lending offers. If you spread your money across many borrowers instead of a few, one default won't hurt your overall returns much.

Preeti Zende, a Sebi-registered financial advisor and founder of Apna Dhan Financial Services, explained the safeguards. "Platforms in this space have to be registered as NBFCs with the RBI, which sets the rules for how they work. They also have to open escrow accounts with a secure bank, so the platform itself can't misuse the money," she said.

Borrowers are charged interest based on their creditworthiness, so what investors earn isn't fixed either.

**Should you invest?**

P2P lending can pay well. Returns are usually higher than bank FDs, typically around 10 to 15% a year.

Mohan Parsuramka, COO and Head of Business, P2P at 1 Finance, said a well-built P2P portfolio can turn into a source of passive income, with regular interest coming in as borrowers repay.

Not everyone is convinced it suits retail investors, though. Zende said she doesn't recommend it because of the high risk, and that it isn't right for people investing towards specific financial goals.

Parsuramka also pointed out the catch. "These loans are unsecured, so there's no collateral behind them. If a borrower defaults, the lender takes the loss," he said.

Sridharan S., a Sebi-registered investment advisor and CEO of Wallet Wealth, put it simply. "It's high risk and high return. When the return is high, the risk to your capital is high too," he said.