Who will Mon­i­tor Peer-to-Peer Lend­ing? Will it be Sebi or RBI?

The Economic Times - - Commodities Plus - San­gita.Me­hta@ times­group.com

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.


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