HomeMedia CenterRBI to issue guidelines for peer-to-peer lending as NBFC today

RBI to issue guidelines for peer-to-peer lending as NBFC today

RBI last month mentioned that peer-to-peer lending platform has been notified as an NBFC under section 45I (f) (iii) of the Reserve Bank of India Act, 1934. ​

While maintaining a status quo in the fourth bi-monthly monetary policy for FY18, the Reserve Bank of India issued a discussion paper on regulation of P2P platform as NBFC.

As per the gazzette notification published on September 18, 2017, the peer-to-peer lending platform has been notified as an NBFC under section 45I (f) (iii) of the Reserve Bank of India Act, 1934.

RBI said, “Consequently, the central bank is issuing regulations for NBFC (P2P) today.”

As per RBI, the P2P lending is a form of crowd-funding used to raise loans which are paid back with interest. It can be defined as the use of an online platform that matches lenders with borrowers in order to provide unsecured loans.

Fees are paid to the platform by both the lender as well as the borrower.

The borrowers pay an origination fee (either a flat rate fee or as a percentage of the loan amount raised) according to their risk category.

The lenders, depending on the terms of the platform, have to pay an administration fee and an additional fee if they choose to use any additional service (e.g. legal advice etc.), which the platform may provide.

This platform provides the service of collecting loan repayments and doing preliminary assessment on the borrower’s creditworthiness.

In its consultation paper released in April 2016, some of the RBI suggested framework for P2P lenders are given below.

P2P platforms should be set up as a compamy with minimum capital of Rs 2 crore requirement.

Funds shoud move directly from lender’s bank account to borrower’s bank account in order to eliminate threat of money laundering.

P2P firms are responsible for maintaining ially of customer data. These firms are however prohibited from guaranteeing extraordinary or returns.

Adequate disclosures must be made by the P2P firms to the central bank.

Credit: Zee Business

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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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