HomeMedia CenterPeer-to-peer lending start-ups get RBI guidelines, but want further clarifications

Peer-to-peer lending start-ups get RBI guidelines, but want further clarifications

Reserve Bank of India (RBI) has published a discussion paper declaring guidelines for peer-to-peer lending companies, in which it says that “to ensure that there is enough skin in the game at a later date, leverage ratio may be prescribed so that the platforms do not expand with indiscriminate leverage”.

The paper has got positive reactions from peer-to-peer lending start-ups, who however want clarifications on requirements like a direct lending process and leverage ratio. The start-ups have time till May 31 to file their feedback.

These peer-to-peer lending start-ups including i-lend, Faircent, LenDenClub and Micrograam, who have decided to seek clarification son this requirement. “The question of leverage ratio doesn’t arise when you’re not lending on your balance sheet,” said VVSSB Shankar, founder of i-lend. Shankar would be discussing the matter with RBI officials.

“From the transaction amount, we have kept aside a amount that could act as a lender protection fund. One could consider keeping aside a capital of .2% which can be utilised by the lenders in case of a default,” said Bhavin Patel, cofounder of Len-DenClub. “Leverage ratio is not the right way to go about it”. LenDenClub said that it would like RBI to lower the Rs 2-crore capital requirement for peer-to-peer lending companies.

Along with the clarifications on requirements, these start-ups also want clarifications on the process of transferring money from a lender to a borrower. For this, many such companies are presuming a nodal account will be used.

“With UPI (the government’s unified payment interface that will make digital money transactions smoother and safer) coming in, the tech-enabled will ensure the money can move directly from point A to point B. This money would be outside of the accounts of the intermediary. However, until then it’s likely that nodal accounts will be used,” said Rajat Gandhi, founder of Faircent.

These P2P lending companies, about 30 such in India, allow individuals to lend and borrow from others using their online platforms, but have been largely unregulated until now.

Now that the guidelines have been issued, start-ups also seek clarification on the expectations regarding their brick-and-mortar presence.

Original Source… href=”http://www.businessinsider.in/Peer-to-peer-lending-start-ups/articleshow/52073823.cms

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The lending transaction is purely between lenders and borrowers at their own discretion, and LenDenClub does not assure loan fulfilment and/or investment returns. 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 investment 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’ investment amounts.

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

*P2P investment is subject to risks. And investment 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 returns received by investors

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