HomeMedia CenterBloomberg: Peer-To-Peer Lending Platforms To Be Regulated As NBFCs

Bloomberg: Peer-To-Peer Lending Platforms To Be Regulated As NBFCs

The Reserve Bank of India (RBI) has notified that peer-to-peer (P2P) lending platforms will be seen as non-banking finance companies (NBFCs), beginning the process of regulating such companies.

In a gazette notification dated September 18, the RBI stated that a non-banking institution that conducts ‘the business of a peer-to-peer lending platform’ will be a seen as an NBFC. P2P lending will mean the business of providing the service of loan facilitation via an online medium or otherwise, the notification added.

Over the last four years more than 30 startups have launched online P2P lending businesses. Faircent, i2ilending, LenDenClub and Billion loans are among them. These lending platforms specialize in connecting people who need money with people who have funds to invest. While P2P lenders facilitate such transactions, they do not lend money themselves.

In April 2016, the RBI issued a consultation paper and suggested that P2P lenders be regulated as a special category of NBFCs. It had also proposed a number of checks and balances. Among them was a minimum capital requirement of Rs 2 crore for companies operating as P2P lenders and a prescription for the leverage ratio that these companies should adhere to. It also said that P2P lenders should operate only as intermediaries and not take on any bank-like functions such as accepting deposits. No cap on rates or lending amounts was prescribed. The regulator, however, said that prudential limits may be considered.

Also Read: In Game Of Loans, RBI Arms A New Player

While the notification clarifies the regulatory jurisdiction for P2P lenders, detailed guidelines on applicable rules are yet to be issued.

“We welcome the decision by the government, but this is a battle half won for the players in the P2P lending space,” Raghavendra Pratap Singh, co-founder of i2ifunding said over the phone. “This notification shows that P2P lending platforms are here to stay and now we will see real growth in this sector.”

Credit: Bloomberg

LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping lenders diversify their investments beyond traditional investment instruments ever since.



The Reserve Bank of India does not accept any responsibility for the correctness of any of the statements or representations made or opinions expressed by Innofin Solutions Private Limited, and does not provide any assurance for repayment of the loans lent through its platform.

LenDenClub is an Intermediary under the provisions of the Information Technology Act, 2000 and virtually connects lenders and borrowers through its electronic platform via the website and/or mobile app.

The lending transaction is purely between lenders and borrowers at their own discretion, and LenDenClub does not assure loan fulfilment and/or lending simple interest. Also, the information provided on the platform is verified or checked on the best efforts basis without guaranteeing any accuracy of the data/information verification. Any lending decision taken by a lender on the basis of this information is at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower, fully or partially. The risk is entirely on the lender. LenDenClub will not be responsible for the full or partial loss of the principal and/or interest of lenders’ lending amounts.

*This is an annualized yield and is subject to the maximum FMPP tenure, which is 5 years. P2P lending is subject to high risk and may cause an entire loss of principal.

*P2P lending is subject to risks. And lending decisions taken by a lender on the basis of this information are at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower.

** Average value mentioned is the weighted average of simple interest received by lenders

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