No notification on P2P lending norms yet
THE Reserve Bank of India (RBI) is waiting for a gazette notification from the government on getting the peer-topeer lenders under its regulatory ambit before coming out with guidelines on the sector, a senior official said on Wednesday.
“Following up on the consultation paper we did last year, we are shortly going to come up with guidelines on peer to peer lending,” RBI executive director Sudarshan Sen said here.
RBI released the consultation paper on P2P lending in April 2016, but the final guidelines are yet to come.
Sen said a notification from the government is the missing part, which is preventing RBI from releasing the final guidelines.
“First, we need the government to notify P2P platforms as an entity to be regulated by RBI. That requires a gazette notification. Once that happens, we come out with regulation,” Sen said. The legislative change for the same has come in and it is only a gazette notification that is required, he added.
A June 29 report quoting top finance ministry sources had said RBI would come out with the final guidelines in 2-3 weeks. “We have given our comments to RBI. The guidelines should be out soon. The norms will be out before July-end,” the official had said. He also said the finance ministry has recommended that these platforms be registered as nonbanking financial institutions. “P2P platform needs to be regulated by RBI so as to ensure players play by the rule,” the official said.
According to the official, the P2P lending interface will come under the purview of RBI regulation by defining these platforms as NBFCs under the RBI Act by issuing a notification in consultation with the government.
The proposed regulatory framework would encompass the permitted activity, regulations on capital, governance, business continuity plan and customer interface, apart from regulatory reporting, the official added.
“Although nascent in India and not significant in value yet, potential benefits that P2P lending promises to various stakeholders (to borrowers, lenders and agencies) and its associated risks to the financial system are too important to be ignored,” the consultation paper said.
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.