Consider the following statements about Peer to Peer P2P lending 1 It enables individuals to borrow ...........

Economic Affairs Money Supply and Monetary Policy

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Consider the following statements about Peer to Peer (P2P) lending

1. It enables individuals to borrow and lend money without any official financial institution as an intermediary.

2. It involves less time, effort and risk than the normal banking system

3. P2P platforms are free to operate in India without any regulation.

Which of the above statement is/are correct?

1 only

3 only

1 and 3 only

1,2, and 3

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Explanation:

1 only

Statement 1 is correct. Peer to Peer (P2P) lending enables individuals to borrow and lend money directly without the involvement of traditional financial institutions like banks.

Statement 2 is incorrect. While P2P lending may offer certain advantages such as convenience and potentially faster processing times compared to traditional banking, it also involves risks, and borrowers and lenders need to assess these risks carefully.

Statement 3 is incorrect. P2P lending platforms are regulated by the Reserve Bank of India (RBI) as Non-Banking Financial Companies (NBFC-P2P), and they are required to comply with regulatory guidelines issued by the RBI to safeguard the interests of borrowers and lenders.

Therefore, only statement 1 is correct