HomeMedia CenterPeer-to-peer lending startups seek clarity on guidelines issued by RBI

Peer-to-peer lending startups seek clarity on guidelines issued by RBI

Peer-to-peer lending startups reacted positively to the first draft of the Central bank’s guidelines for the sector, but will seek clarifications on requirements such as a direct lending process and leverage ratio.

They have until May 31 to file feedback.

Reserve Bank of India, which published a discussion paper on Thursday with guidelines for peer-to-peer lending companies, said 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”.

Startups including i-lend, Faircent, LenDenClub and Micrograam want a clarification on 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, who plans to discuss the matter with RBI officials on Wednesday.

According to LenDenClub, instead of a prescribed leverage ratio, a fund for lender protection could be set up.

“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 0.2% which can be utilised by the lenders in case of a default,” said Bhavin Patel, cofounder of Len-DenClub.

Original Source… http://tech.economictimes.indiatimes.com/news/startups/peer-to-peer-lending-startups-seek-clarity-on-guidelines-issued-by-rbi/52069933

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*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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