Which of the following statements is are incorrect with respect to Peer to Peer P2P Lending 1 It is ...........

Economic Affairs Types of Banks and Banking

Which of the following statements is/are incorrect with respect to Peer to Peer(P2P) Lending?

1. It is a method of borrowing and lending money without the use of an official financial institution as an intermediary.

2. For borrowers P2P sometimes offer better interest rates than traditional bank.

3. P2P loans primarily gives access to financing mainly to vulnerable and BPL families.

select the correct code:

3 only

2 and 3 only

1 and 3 only

All of the above

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Explanation:

Peer-to-peer (P2P) lending is a method of debt financing that enables individuals to borrow and lend money without the use of an official financial institution as an intermediary. Peer-to-peer lending removes the middleman from the process, but it also involves more time, effort and risk than the general brick-and-mortar lending scenarios.
P2P lending is also known as social lending or crowdlending.The year 2018 shows significant growth in P2P lending, in the month of January overall P2P lending was in the range of Rs 5-6 crore and at the end of December, it increased to Rs 20-25 crore (data sourced from P2P lending firm i2ifunding. They have compiled lending numbers internally from 13 RBI registered P2P players).
The Reserve Bank of India (RBI) regulates P2P lending platforms to protect the interest of lenders and borrowers. In October 2017, RBI made it mandatory for all P2P companies existing to apply for a licence to continue as a P2P platform.
All new entrants had to get a provisional NBFC-P2P licence from RBI to start operations in this space. This has made sure that all operational P2P players are either regulated or are awaiting a licence from the regulator. The P2P players needed regulation by RBI to ensure players follow certain rules in lending and borrowing.
In these guidelines, RBI has maintained a cap on lenders and borrowers on the P2P platform. Any lender cannot invest more than Rs 10 lakh across all P2P platforms. Similarly, a borrower cannot borrow more than Rs 10 lakh across P2P platforms. A lender cannot lend more than Rs 50,000 to the same borrower across P2P platforms, at any point in time.