No no­ti­fi­ca­tion on P2P lend­ing norms yet

Financial Chronicle - - PLAN, POLICY -

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.

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