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P2P lending and Crowd funding are terms that are slowly but steadily growing in India. It is yet to gather momentum as payments banks or mobile wallets. RBI has started analyzing the model and therefore in this article we shall look at these two concepts.
Following are the points on P2P Lending and Crowd Funding:
Secured loans are sometimes offered by using luxury assets such as jewelry, watches, vintage cars, fine art, buildings, aircraft and other business assets as collateral. They are made to an individual, company or charity. Other forms of peer-to-peer lending include student loans, commercial and real estate loans, payday loans, as well as secured business loans, leasing, and factoring.
The routes that could possibly be explored under Security-Based Crowd funding, are the following:
The Reserve Bank of India (RBI) had floated a consultation paper in April 2016 on the Indian P2P lending that has been taking roots in India. RBI has proposed to register the P2P lending Platforms as Non-Banking Financial Companies (NBFCs).
Further, according to the document, the proposed regulation is proposed to encompass the following:
The prudential requirements will include a minimum capital of INR 2 crore with a prescribed leverage ratio to avoid indiscriminate leverage on the Platforms.
The Platforms will need to submit regular reports on their financial position, loans arranged each quarter, complaints etc. to the Reserve Bank. The Bank may come out with a detailed reporting requirement.
P2P Lending and Crowd funding provide a lot of benefits however these are offered through online portals, it is vital to verify the authenticity and reliability of the website before you move forward for transacting. In case you need more insight into these concepts, contact Enterslice.
Read our article: Peer to Peer Lending Business: Pioneering the Fintech Industry
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