How to Invest in P2P Lending Platforms: Complete Guide

by Vested Team
April 26, 2024
4 min read
How to Invest in P2P Lending Platforms: Complete Guide

Looking to diversify your investment portfolio with higher returns than traditional investments? Peer-to-peer (P2P) lending platforms in India offer an interesting option for investors seeking P2P investment. This article walks you through the basics of investing in P2P lending in India. It covers the investment process, expected returns, eligibility, and documentation. 

Investing process in P2P Lending platforms in India

Investing in P2P lending platforms involves lending money to individuals or small businesses. You do this in exchange for interest. Here’s a breakdown of the steps to initiate your venture:

  1. Choose reputable P2P platforms: When selecting a P2P lending platform, prioritize those with a proven record of steady returns to investors. They should have diverse borrowers and clear information for decisions. Also, factor in the platform’s focus, be it small businesses or individuals. To manage risk, spread investments across multiple platforms since P2P lending is a relatively new concept in India.
  2. Open an account: Sign up on your chosen platforms. Or, use an investment app that combines multiple platforms to simplify the process of investing in the P2P product. Such an app can simplify your journey and even offer a consolidated view of your investments.
  3. Complete KYC verification: Do it by providing basic information, including PAN, Aadhaar, and bank account details.
  4. Select the investment option: After your KYC is approved, you can either choose an investment plan (if provided by the platform, which automates borrower selection) or pick loans to invest in. Your decision should match your investment objectives. You should weigh the returns against the investment’s lock-in period. 
  5. Deposit funds: Begin your P2P investing journey by depositing funds. You can transfer funds using UPI as well as net banking.
  6. Enjoy interest: After investing, you will benefit from regular interest throughout the loan’s duration. Not all platforms pay monthly interest. Some reinvest it, which boosts the return.
  7. Principal repayment: As the investment period ends, you get your principal amount as well. You may choose to reinvest the money with the platform. A few of the platforms offer this option. You can even automate it.

Eligibility for investing In P2P Lending in India

To invest in P2P lending in India, you can be either a resident or non-resident in India.

  • Resident Indians need to:
    • Have a valid PAN and Aadhaar card
    • Have an active bank account
    • Be 18 years or above age
  • Non-resident Indians (NRIs) need to:
    • Have a valid PAN card
    • Passport copy
    • Have an NRO account
    • 18 years or above in age
    • Have an address proof of the overseas address


  • The KYC for NRIs has extra details. So, it is processed manually, not online like for Resident Indians.
  • As per RBI guidelines for NBFC-P2P, a user investing in P2P Lending in India should ensure that there is no international transfer of funds. Hence, an NRI can invest through an NRO (Non-resident ordinary rupee) account only.

Documents required for investing in P2P platforms

The documents for P2P investments are simple. They may vary by platform. But, you will typically need to provide the following documents:

  • PAN card
  • Aadhaar card
  • Bank account details  

These documents are essential for KYC verification and complying with the regulatory guidelines.

Understanding returns on P2P Lending

The returns in P2P lending come from the interest paid by borrowers. The interest rates are often higher than traditional investments, reflecting the risk involved. 

The returns can vary depending on the platform, the loan/investment as well as the plan you selected. But, you can typically expect to earn an interest rate of 9-12% per year. Remember that while higher returns are possible, they come with a certain level of risk. Read more about the risks involved in investing in p2p lending. Understanding the risks involved in P2P lending is recommended.


Peer-to-peer (P2P) lending is a relatively new investment option in India, but it is growing in popularity. It lets people lend money directly to other people or businesses. They do this without using banks or other traditional financial institutions. P2P lending can be a good way to earn higher returns than traditional investments, such as savings accounts and fixed deposits.

However, you must do your research before you invest and understand the risks involved. Here are some key things to keep in mind when investing in P2P lending:

  • Choose reputable P2P lending platforms
  • Start small and diversify your portfolio
  • Monitor your investments and keep an eye on the interest/repayments (or NPAs)
  • Be aware of the risks involved, such as default risk and liquidity risk

Here is how Vested Edge scores over investing in a P2P platform directly:

Feature  Vested Edge P2P platforms
Platform diversification  High 

We spread investments across multiple regulated P2P platforms


The investments are concentrated on a single P2P platform

Diversification of the loans  High 

Exposure to various types of loans, such as subvention (Zero cost EMIs), personal, and merchant loans. This is possible by partnering with multiple platforms offering loans to different types of borrowers


Although the investments are spread across multiple borrowers, the type of borrowers are not diversified as every platform has its expertise

Regular and detailed updates  Yes

We regularly monitor the partner platforms and provide you with ongoing reports and updates


Many platforms don’t provide frequent updates in an easy-to-understand manner

User-first approach  Yes

A low minimum investment amount, exclusive offers, transparency, balanced risk vs reward, and dedicated customer support make Edge an ideal choice


Many platforms work with a single partner and may not provide a balanced risk vs reward option for investing in P2P lending.


Frequently Asked Questions

Who can invest in P2P lending?

  • Both resident and non-resident Indians meeting the age requirement (18 years or above) can invest in P2P lending platforms. 
  • Residents need a PAN, Aadhaar, and an active bank account, while NRIs require a PAN, passport, NRO account, and proof of overseas address.

What is the minimum investment for P2P lending?

  • The minimum P2P lending investment varies by platform but typically ranges in a few thousand rupees. This low barrier allows investors to start with small amounts, facilitating diversification and risk management.
  • On Vested, an investor needs to invest at least INR 50,000 to start their P2P lending journey.

What are the returns on P2P lending?

Annual returns in P2P lending platforms typically range from 9% to 12%, varying based on the platform, loan/investment type, and chosen plan. However, higher returns come with inherent risks, such as default risk and liquidity risk.

Is P2P lending safe?

  • P2P lending is regulated by the RBI, ensuring safety measures like thorough KYC checks. Though generally safe, there are risks like borrower defaults and platform insolvency. 
  • Diversification and opting for trusted platforms enhance safety. Vested aids diversification by letting you invest across multiple RBI-regulated platforms at once.

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