Whether you are a seasoned investor or a curious newbie, you’ve likely seen the advertisements. P2P platforms promised 12% returns, the safety of “diversification,” and crucially, the ability to withdraw your money whenever you wanted.
For a long time, Peer-to-Peer (P2P) lending in India felt like a miracle. It was better than a Fixed Deposit (FD) and more stable than the stock market. But then, the music stopped.
In August 2024, the Reserve Bank of India (RBI) dropped a regulatory hammer. Almost overnight, “Anytime Withdrawal” disappeared. Fast forward to today, in early 2026, many of you are still staring at your app screens, clicking “Withdraw,” and seeing nothing but a “Processing” wheel or a “Queue” that never seems to move.
What went wrong? Why is your money stuck even 18 months later? And what on earth do UPI “Collect Requests” have to do with it? What can you do about it?
Estimated read time: 6 minutes and 04 seconds
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Buckle up. Here we go!
The Magic Trick: How P2P Lending Used to Work?
To understand why your money is stuck, we first have to understand the “magic” the platforms were performing before 2024.
P2P lending is simple in theory: You (the Lender/Investor) give ₹10,000 to Ramesh (the Borrower) via a platform. Ramesh pays back the money with interest over 12 months. You get your money back month-by-month as EMIs.
But investors didn’t want to wait 12 months. They wanted to withdraw their money whenever they felt like it. To satisfy this, platforms created a “Secondary Market.”
If you wanted to withdraw your ₹10,000 after just 2 months, the platform would simply find a new investor (let’s call her Priya) to take over your loan. Priya’s money would go to you, and she would now own the rights to Ramesh’s future EMIs.
It was like a game of musical chairs. As long as new investors (Priyas) were joining, the old investors (You) could exit anytime.
The RBI’s Master Directions for P2P NBFCs (August 2024)
The RBI watched this “musical chairs” game and grew worried. They realised that P2P platforms were essentially acting like banks, taking deposits and promising instant liquidity, but without the safety nets (like SLR, CRR, or Deposit Insurance) that banks must have.
In August 2024, the RBI issued new Master Directions. They said:
- No “Anytime Withdrawal”: Platforms cannot promise or facilitate instant exits.
- No Secondary Market Exits: You cannot use a new lender’s money to pay off an old lender.
- T+1 Settlement: Money cannot sit in the platform’s Escrow account. It must move to the borrower (during lending) or the lender (during repayment) within 24 hours.
Why Can’t P2P Investors Still Withdraw Their Money In 2026?
You might be thinking, “Okay, but that was 1.5 years ago! Why haven’t I gotten my money yet?” There are five big reasons why the “Withdrawal” button is still broken for many.
1. The Asset-Liability Mismatch
When you invested your money, the platform didn’t just put it in a box. They lent it to hundreds of small borrowers. Some of those loans had tenures of 24 or 36 months.
Because the RBI banned the “Secondary Market” (the musical chairs game), you can no longer “sell” your loan to a new investor to get out early. You are now legally locked in until the actual borrower pays back the last rupee of their loan.
2. The “Matching” Bottleneck
Under the new rules, every single rupee must be “mapped” and “matched” to a specific borrower. Platforms used to “pool” money (which is now illegal).
Now, if a borrower pays back ₹500, the platform has to move that specific ₹500 to your bank account within T+1 days.
However, many platforms are struggling with the sheer technical load of matching thousands of tiny EMI fragments to thousands of individual lenders in real-time. This has created a massive backlog in their systems.
3. Borrower Defaults – The NPA Problem
Here’s the uncomfortable truth: some investors can’t withdraw because the borrowers they lent to haven’t paid back.
P2P platforms had a dirty little secret. They often marketed themselves as safe, high-return investments. But the reality? Non-performing assets (NPAs) in the P2P sector crossed ₹1,163 crore in FY24, up from ₹472 crore in FY23.
When you lent money through these platforms, you were taking on real credit risk. If the borrower defaults, you lose your money. No deposit insurance. No guarantees. The new RBI rules make this crystal clear: platforms cannot provide any credit guarantee or bear any credit risk. All losses are borne by you, the lender.
So when you request a withdrawal, and the platform says “We’re working on it,” sometimes what they really mean is: “The borrower hasn’t paid, so there’s no money to give you.”
4. Regulatory Uncertainty and Compliance Chaos
The RBI hasn’t just changed the rules once. They’ve been continuously monitoring, sending questionnaires, issuing show-cause notices, and levying fines.
In October 2024, the RBI sent show-cause notices to six P2P platforms for non-compliance. In December 2024, they sent an 18-point questionnaire to eight platforms demanding detailed information about their operations.
For platforms, it’s like trying to build a house while someone keeps changing the building code. They’re scared to make any wrong move because one violation could mean license cancellation or heavy fines.
This fear has led to paralysis. Platforms are being extra cautious, which means slower processing of withdrawals and more delays for investors.
5. The UPI “Collect Request” Blow (October 2025)
In a fresh blow to the sector, the NPCI (National Payments Corporation of India) ended “P2P Collect Requests” in October 2025.
Wait, what does that mean?
Previously, P2P platforms would send an automated “Collect Request” to the borrower’s UPI app every month. The borrower just had to click “Approve.” It was a highly efficient way to collect repayments.
Now, that feature is gone to prevent fraud. Borrowers must now manually “push” the payment or use more complex e-mandates (NACH). This “friction” has caused a dip in repayment rates. When borrowers find it harder to pay, you find it harder to withdraw.
While this isn’t the main reason for withdrawal issues, it added one more layer of operational complexity that platforms had to navigate.
What Can You Do If You’re Unable to Withdraw Your Money?
If you’ve been clicking “Withdraw” for months and nothing is happening, here is your step-by-step action plan.
Step 1: Check your “Loan Portfolio”
First, log in to your P2P platform account and understand exactly what’s happening with your money:
- How many loans are you invested in?
- What are their repayment statuses?
- Are borrowers making EMI payments on time?
- What’s the tenure of each loan?
If borrowers are paying regularly, you’ll get your money back as EMIs come in. It’s just slower than the instant withdrawal you were promised.
But if the loans have matured and money isn’t in your account, then this is a “Deficiency of Service.” Move to Step 2.
Step 2: The Formal Complaint
Send a formal email to the platform’s Grievance Redressal Officer (GRO). Every RBI-regulated P2P NBFC must have one. Be specific:
“My loan ID [X] matured on [Date]. The funds have not been credited to my bank account despite the T+1 settlement rule. Please resolve within 30 days.”
Also, ask specific questions:
- When can you expect your withdrawal?
- Are there any defaults in your loan portfolio?
Keep records of all communication. Take screenshots of emails and save chat transcripts.
Step 3: Escalate to the RBI Ombudsman
If the platform doesn’t give you a satisfactory answer within 30 days, do not waste more time with their customer support. Go to the RBI CMS (Complaint Management System) portal.
- Website: RBI CMS
- What to select: File a complaint against “NBFC-P2P.”
- Why it works: The Ombudsman has the power to penalise platforms and even cancel their licenses if they are found violating the T+1 settlement rules or mismanaging funds.
Step 4: Seek Legal Recourse
If all else fails, you may need to consider legal action. You can:
- File a consumer complaint: P2P platforms provide a service, so you can approach consumer courts if there’s a deficiency in service.
- Send a legal notice: Sometimes, a legal notice from a lawyer is enough to get the platform moving.
- File a civil suit: For larger amounts, you might need to file a civil suit to recover your money, though this can be time-consuming and expensive.
- Join a collective action: If multiple investors are facing the same issue with a platform, there might be strength in numbers. Look for investor groups or forums where affected people are coordinating.
Step 5: Be Realistic About Your Expectations
Here’s the tough part: you might not get all your money back immediately, or even at all.
If borrowers have defaulted, the platform has limited options to recover your money. They can pursue legal action against defaulters, but that takes years and costs money.
Your best bet is to:
- Wait for scheduled EMIs to come through
- Accept that some portion might be written off because of defaults
- Be patient with the withdrawal process under the new framework
The Hard Truth: A Lesson in Risk
P2P lending was never a “Savings Account.” It was always high-risk lending. The platforms just did a very good job of hiding that risk behind a shiny “Anytime Withdrawal” button.
The RBI didn’t “break” P2P; they simply forced it to be honest. They wanted you to realise that when you lend money to a stranger for 12% interest, that money is not liquid. It is tied to the life of the loan.
Final Thoughts
If you still have money in these platforms, stop looking for an “Exit” button and start looking at your “Repayment Schedule.” Your money will probably trickle back to you over the next few months as borrowers pay their EMIs.
In the future, if an investment offers 12% and says you can withdraw “anytime,” remember the 2024 P2P crisis. In the world of finance, if something sounds too good to be true, the RBI usually eventually agrees with you and shuts it down.
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Still Curious?
If you are like us, who likes to analyse a little more or check out content in different formats, well you are in luck. Below you can find some suitable content we found.
ALT Investor – P2P & Asset Liability Mismatch: A Brewing Disaster (Blog)
Arohana Legal – Cryptocurrency Bank Account Freeze: How to Unfreeze Accounts in India (Blog)
Note: We don’t have any affiliation with them. We are sharing links only for educational purposes. The opinions expressed by them belong solely to them and do not reflect the views of Vrid.
