P2P firms can neither raise deposits nor lend on their own

The RBI has finally issued its master directions and final guidelines for the existing peer-to-peer (P2P) lending platforms in the country.

From now on, all the P2P platforms will be known as non-banking financial company-P2P (NBFC-P2P). As per the RBI guidelines, all the existing P2P players in the country will be required obtain a Certificate of Registration (CoR) to become an NBFC-P2P player.

P2P companies shall have a net owned fund of more than ₹2 crore.

The RBI will go through the eligibility criteria and initially give only an in-principle approval of 12 months during which the company would be required to put in place the technology and operations in place before getting a final approval. A P2P firm cannot raise deposits or lend on its own. It will not hold, on its own balance-sheet, funds received from lenders for lending, or funds received from borrowers for servicing loans, or provide credit guarantee. It is also not allowed to cross-sell any products except loan specific insurance products. The NBFC-P2Ps are also not allowed to permit international flow of funds.

Besides, the players in the segment are required to do proper due-diligence of both lenders and borrowers, are required to submit both credit bureau data and historical data of their users, render recovery services, and provide loan-related assistance.

While, the P2P players such as Faircent, Lendenclub, Monexo and Qbera amongst others were already adhering to the aforementioned, they are disappointed with the cap on borrowing and type of loans.

As per the new rules, a borrower can at a time take loans up to ₹10 lakh across all platforms and that the platforms can only offer unsecured loans.

Also, a lender at a time cannot give loans above ₹50,000 to one borrower and that the maturity of loans shall not exceed 36 months.

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