The Reserve Bank of India has suggested treating peer-topeer lending platforms as non-banking finance companies (NBFCs) with a minimum capital of ` . 2 crore. Though the regulator has allowed the players to continue connecting lenders and borrowers through an online platform, they have specifically restricted them from taking any form of deposits.In a consultation paper released on Thursday, the central bank has invited comments and views from the general public within May 31.
The RBI has clearly stated that P2P lenders, as they are popularly called, would be acting only as an intermediary without doing any lending or borrowing activities themselves. Though they would be allowed to “opine on a suitability of a lender and the creditworthiness of a borrower“, the RBI has put restrictions on advertisements and on usage of terms like `guaranteed returns or assured returns’, either directly or indirectly on their websites.
“We are purely a platform who connects people with excess funds with people looking for funding, so we are not in the business of lending ourselves or taking deposits. However, what the RBI has said about restricting any promise of great returns is something that we had been always talking about and is a good step for our sector,“ said Rajat Gandhi, CEO, Faircent, one of the most prominent P2P lenders.
The RBI has said that since the platforms have been providing a credit score for the borrowers, the responsibility for confidentiality and security of the customer’s data would remain the responsibility of the platform. They have also suggested that there should be well-defined criteria for the top management of these companies. However, the fact that the minimum capital required being put . 2 crore, has been at ` looking a bit steep for these small technology companies which have just started business.
“The minimum requirement of . 2 crore, I believe could capital of ` hurt further innovations in this sector, especially since it is an evolving space. However the RBI has asked for suggestions and we will be incorporating all our views,“ said Bhavin Patel, co-founder of Mumbai based P2P platform LenDen Club. The RBI has also added that since the central bank can only have control over companies and cooperative societies, peer-to-peer lenders need to be registered as companies to be able to conduct these operations.
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