This study examines the development of Peer-to-Peer (P2P) lending, a revolutionary fintech innovation that facilitates direct borrowing and lending between individuals without traditional financial intermediaries like banks. Originating in the mid-2000s, P2P lending has grown rapidly, driven by digitalization, lower interest rates for borrowers, and higher returns for investors In India, regulatory support from the Reserve Bank of India (RBI) since 2017 has led to the formalization of P2P lending platforms as Non-Banking Financial Companies – Peer-to-Peer Lending Platforms (NBFC-P2P). P2P platforms leverage technology to assess borrower creditworthiness through alternative data, enabling financial inclusion while managing risk. Using a qualitative methodology grounded in secondary data and thematic analysis, the paper explores the regulatory landscape, technological innovations, and market dynamics of Indian P2P lending. Findings reveal that while P2P platforms promote financial inclusion and offer competitive returns, they also face challenges including credit risk, liquidity constraints, and regulatory compliance. The paper concludes with insights into future trends and policy implications for sustainable development of the sector.
