RBI Sug­gests NBFC Sta­tus for P2P Lenders

The cen­tral bank has also sug­gested a min­i­mum cap­i­tal of .₹ 2 crore for such lend­ing plat­forms

The Economic Times - - Economy: Micro, Macro & More - Pratik.Bhakta@ times­group.com

Mum­bai: The Re­serve Bank of In­dia has sug­gested treat­ing peer-topeer lend­ing plat­forms as non-bank­ing fi­nance com­pa­nies (NBFCs) with a min­i­mum cap­i­tal of .₹ 2 crore. Though the reg­u­la­tor has al­lowed the play­ers to con­tinue con­nect­ing lenders and bor­row­ers through an on­line plat­form, they have specif­i­cally re­stricted them from tak­ing any form of de­posits. In a con­sul­ta­tion pa­per re­leased on Thurs­day, the cen­tral bank has in­vited com­ments and views from the gen­eral public within May 31.

The RBI has clearly stated that P2P lenders, as they are pop­u­larly called, would be act­ing only as an in­ter­me­di­ary with­out do­ing any lend­ing or bor­row­ing ac­tiv­i­ties them­selves. Though they would be al­lowed to “opine on a suit­abil­ity of a lender and the cred­it­wor­thi­ness of a bor­rower”, the RBI has put re­stric­tions on ad­ver­tise­ments and on us­age of terms like ‘guar­an­teed re­turns or as­sured re­turns’, ei­ther di­rectly or in­di­rectly on their web­sites. “We are purely a plat­form who con­nects peo­ple with ex­cess funds with peo­ple look­ing for fund­ing, so we are not in the busi­ness of lend­ing our­selves or tak­ing de­posits. How­ever, what the RBI has said about re­strict­ing any prom­ise of great re­turns is some­thing that we had been al­ways talk­ing about and is a good step for our sec­tor,” said Ra­jat Gandhi, CEO, Fair­cent, one of the most prom­i­nent P2P lenders.

The RBI has said that since the plat­forms have been pro­vid­ing a credit score for the bor­row­ers, the re­spon­si­bil­ity for con­fi­den­tial­ity and se­cu­rity of the cus­tomer’s data would re­main the re­spon­si­bil­ity of the plat­form. They have also sug­gested that there should be well-de­fined cri­te­ria for the top man­age­ment of th­ese com­pa­nies. How­ever, the fact that the min­i­mum cap­i­tal re­quired be­ing put at .₹ 2 crore, has been look­ing a bit steep for th­ese small tech­nol­ogy com­pa­nies which have just started busi­ness. “The min­i­mum re­quire­ment of cap­i­tal of .₹ 2 crore, I be­lieve could hurt fur­ther in­no­va­tions in this sec­tor, es­pe­cially since it is an evolv­ing space. How­ever the RBI has asked for sug­ges­tions and we will be in­cor­po­rat­ing all our views,” said Bhavin Patel, co-founder of Mum­bai based P2P plat­form LenDen Club. The RBI has also added that since the cen­tral bank can only have con­trol over com­pa­nies and co­op­er­a­tive so­ci­eties, peer-to-peer lenders need to be reg­is­tered as com­pa­nies to be able to con­duct th­ese op­er­a­tions.

RBI has clearly stated that P2P lenders would not in­dulge in any lend­ing or bor­row­ing ac­tiv­i­ties

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.