The Reserve Bank of India (RBI) has “returned” non-banking finance company (NBFC) license application of peer-to-peer (P2P) company LenDenClub, in a sign that the regulator is uncomfortable with granting NBFC license to P2P entities, sources said.

“The RBI had rejected the NBFC license of LenDenClub when the August 2024 updated guidelines were coming into play. The industry has been suffering through multiple crises after the August circular, with major players stopping on-boarding of customers and winding down current assets,” a source said.

Responding to businessline queries, LenDenClub clarified that the RBI has “returned” the NBFC application of the company around a year back. “The company had applied for the license much before that (May 2024) and completed licensing requirement in 2023. However, the application was returned around a year back when the regulator was working on the overall structure of the sector and therefore this can be taken up at a later stage,” a LenDenClub spokesperson said.

‘No plan to re-apply’

“The license application wasn’t rejected. The regulator takes three possible actions on any NBFC license application: cancel, reject, return. As stated above, the application was returned back by the regulator,” they said, adding that there are no plans to reapply for a NBFC license at this moment as it is focusing on its core P2P business. The RBI did not respond to businessline queries till press time.

According to sources, following the RBI’s August 2024 guidelines, industry assets have fallen by 70-80 per cent since March 2024. This is on account of major players stopping on-boarding of new customers as meeting the RBI guidelines on T+1 settlement cycle is difficult. Further, the RBI diktat that individual lenders on P2P exchanges should manually select borrowers to whom they want to extend loans has made the product unappealing to lenders. LenDenClub, however, said it has been able to maintain its assets under management at around ₹1,000 crore between FY24 and FY25.

“Innovation, when it comes to financial markets, it should not camouflage something different. When we say P2P, it has to be different than lenders operations. If P2P exchanges are acting as lenders, then regulator will come heavily on entities,” a senior former RBI official said.

“If someone goes and asks for NBFC license, the approval process is quite advanced. Nowadays, no one gets NBFC license within a year, the RBI does fit and proper checks, so if an application is returned then the regulator would have also given explanation for the same,” they said.

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Published on June 29, 2025