P2P lending platforms act as a conduit between lenders and borrowers. Borrowers could either be individuals or micro SMEs. Anyone with surplus capital looking for a short-term investment may consider lending money to borrowers. There are over 23 lakh borrowers on Faircent's platform, while 12 lakh on LenDenclub's platform.

Rajat Gandhi, Founder & CEO, Faircent informs the average portfolio return for the lenders stands at 12-14 per cent for a holding period of one year.  For LenDenclub one-year return for calendar year 2020 stood at 13.47 per cent. Patel explains that return on investment (RoI) is different from net returns. "If RoI is 20 per cent and the non-performing asset at 5 per cent for the 12-month loan tenure, then the net RoI will come to 15 per cent. After factoring in 2 per cent platform fee, the net return will come to 13 per cent," he says.

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