Who will Monitor Peer-to-Peer Lending? Will it be Sebi or RBI?
Mumbai: The Reserve Bank of India (RBI) and the Securities & Exchange Board of India (Sebi) officials will soon meet to figure out which of the two regulators has the jurisdiction over peer-to-peer lending as the unattended segment could become a monster and threaten the sanctity of the financial markets.
RBI is expected to seek clarity on P2P or peer-to-peer lending regulations from the high-power body of regulators known as Financial Stability and Developmental Council, senior RBI officials said. P2P is a market place lending that takes place between two unrelated entities on an online platform.
“There is a potential regulatory gap here, should it be Sebi or RBI that regulates these entities. There is no regulatory friction. It is something that will come up before the FSDC. We will talk to them and figure out what needs to be done,” said RBI governor Raghuram Rajan after announcing the policy.
Although P2P has not taken off in a big way in India, it is a concern globally as there are over 2,700 such plat- forms in China and with the collapse of Ezubao, a P2P company, wherein investors lost $ 7.6 billion. “The volumes are small but they can expand quickly,” Rajan said. He said P2P lending expanded in China and at least one scheme has gone off track. This, he said, “impales us to move faster on this. Before they get big, let us understand what needs to be done.” In London, two such P2P lending platforms –– Quakle and TrustBuddy –– failed over the last one and a half years. On Tuesday, while announcing the monetary policy, Rajan said RBI would issue a concept note on P2P lending by April 30, 2016, and finalise regulations in consultation with Sebi. P2P lending is also referred to as social investing or marketplace lending or direct consumer lending. It means that a borrower and lender enter into a financial transaction without any traditional financial intermediary like banks.