What is P2P (Peer-to-Peer) Lending?

P2P lending platforms (regulated by RBI) connect individual borrowers with lenders directly, cutting out banks. Lenders earn higher interest (12–24%) than FDs, but carry credit risk — borrowers may default. SEBI limits total lending by any individual to ₹50 lakh across all P2P platforms. Diversify across many borrowers to manage risk.