Peer to Peer Lending

RBI Regulations on P2P Lending Platform

Peer to Peer Lending RBI

P2P, its abbreviation as Peer to Peer lending, has become an important part of the Indian economy. There is a possibility of a rise in loan disbursals within the past years. The Peer to Peer is underway in such a manner that the entities prefer to raise debt. The categorization of P2P business by the RBI as a Non-banking company (NBFC) after such a long time. At the global level, the P2P lending platforms give rise to the Fin Tech services, and such rise needs to be scrutinized. This is why the USA and China have laid different regulations for functioning such platforms. P2P lending platforms in Britain were inspected and categorized as a loan based on crowdfunding sectors by their Financial Conduct Authority. Crowdfunding generally refers to those organization groups of people, either any businesses that may be a startup, easily raise money using different online portals so as to finance or re-finance their business activities. An individual, as well as businesses, can easily raise money. In Australia, the Securities and Investment Commission coined Market Place Lending for those P2P lending platforms and states it as a type of arrangement under which retail or wholesale investors can invest their money(for earning) further used in the market for lending to borrowers or businesses. This market lending engages the usage of online platforms such as websites where the loan requests from the end of borrowers are made generally. In the United States of America, P2P lending platforms are regulated under the Securities Act of 1933 and recognized as a sale of securities. While in China, these lending platforms cheated the public for a long time.

Acknowledging all these incidents globally, the Reserve Bank of India regulated the P2P lending businesses in the country. It thus formulated a Master Direction issued on the 4th of October 2017 for the P2P  lending business. In its direction, RBI specified the nature of the Direct Selling Agent (DSA) between the P2P lending platforms and mandated the provision of a certificate for those DSAs under the registration of NBFC-P2P.

Definition

Platform refers to a technical device that helps connect the participants.

NBFC-P2P

Accordingly, in Para 4(1) (VI) of the RBI direction, NBFC-P2P refers to a non-banking financial institution affiliating with the business of P2P lending.

P2PLending Platform

P2Plending platform refers to an intermediary providing the loan facility using the online process mentioned in Para 4(1) (IV) of the RBI directions.

Participant

Participants refer to any person who entered an agreement with an NBFC-P2P platform in order to avail services or for lending purposes to make profits, etc. It may be an individual, group of individuals, HUF, society, firm, or incorporated body.

Loan Facilitation

Loan facilitation refers to the relation or connection between the lenders and borrowers, including risk profiling and the loan credit assessment specially performed on the P2P lending platform.

Applicability of the Regulations

Specific Conditions to satisfy the conditions under P2P Lending Platform-

P2P lending platform refers to an intermediary providing the loan facility using the online process mentioned in Para 4(1) (IV) of the RBI directions. Either the loan services could be performed online or offline or if any individual duly entered into an agreement with an NBFC-P2P lending platform to lend on the same platform or avail the lending services provided on the same platform. It is mandatory for the P2P lending platform to serve as an intermediary between the interested participants. Further, the online or offline medium is required to follow the rulings of the NBFC-P2P lending platform, RBI-based directions. Moreover, the interested individual is required to be engaged in an agreement. However, it shows that both the lenders and the borrowers are required to be registered, especially with the same platform, etc.

Can an intermediary arising loan entirely for a lender be considered as a P2P Lending Platform?

Under the RBI directions for the NBFC-P2P lending platform, the main objective of P2P lending platforms is to connect those unrelated peers for the purpose of either lending or borrowing on its platform. If an intermediary arises, a loan entirely for a lender will most probably violate the basic gist of the P2P lending platform. Hence, it can’t be recognized as a P2P lending platform.

What if any DSA arises loan using online or offline method, especially for NBFC/Bank is a P2Plending platform?

Any DSA-arising loan for regulated bodies does not require any certificate or registration under the NBFC-P2P lending platform until those retail lenders are also participants on the same platform.

What if any individual lender operates a lending platform and is considered under a P2P lending Platform?

Suppose any individual lender operates a lending platform to facilitate lending services among interested individuals. In that case, it will not be considered a Peer-to-peer lending platform as it violates the transparency guideline provided by the RBI, and somehow, it may disclose the identity of such individual lenders.

Is any intermediary that connects participants recognized as a P2P lending platform?

P2Plending platforms denote the usage of such kind of impersonalized platform. If the platform is supposed to be personalized, then any broker, along with direct selling agents, may perform the P2P lending process by themselves, which is not intended by the Reserve Bank of India. However, RBI refers to a platform to be of an impersonal nature, especially used to connect lenders and borrowers for lending or borrowing purposes. RBI refers to the platform as single-way transparency, which means that the lender on the said platform is able to see and check the loan request of the borrower along with his/her personal identity, interest rate seeking, and credit score from the end of NBFC-P2P lending platform. In contrast, the borrower can know only the lender’s proposed amount on his loan request along with the interest rate, except the personal identity and any other details of the lenders. Therefore, any platform promotes the association of lenders and borrowers; if not capable of continuing the directions of RBI, it will not be recognized as Peer to Peer lending Platform.

Do DSAs provide services eligible as P2P lending platform services?

Accordingly, the directions provided by the Reserve Bank of India that those electronic platforms that help to assist the banks, NBFCs, or any other regulated financial institutions in order to identify the borrowers will not be considered under the P2P lending platform and be excluded from the registration process of NBFC-P2P lending platform. Excluding from this, if any retail lenders use any platform for lending purposes, be mandatorily registered as an NBFC-P2P lending platform.

Can existing NBFCs be permitted to act as NBFC-P2P?

All the NBFCs must be registered as P2P by the RBI to facilitate the business of the NBFC-P2P lending platform.

Eligibility Criteria

Eligibility Criteria for NBFC-P2P lending platform-

  • The RBI directions specify the guild line for facilitating the P2P lending services requires the interested NBFCs to get registered under the NBFC-P2P lending Platform.
  • NBFC-P2P requires a net owned fund value of above INR 2 crores while making a grant to operate as a P2P lending platform from the RBI.
  • The RBI has only authorized the NBFC to perform the business of lending platforms.
  • All NBFC-P2P requires a certificate of authorization from the end of RBI in case they are going to start or already have started the business of lending P2P lending platform services.

Net Owned Fund (NOF) for NBFC-P2P lending platform

The RBI mandatorily requires the net owned fund before allowing the concerned NBFCs to work as P2P lending platform services with a value above INR 2 crores. The said net-owned fund, along with its source and promoter details, are to be required before the time of issuing the certificate from the end of RBI.

Approval from RBI for NBFC-P2P Lending Platform

Conditions when NBFC-P2P lending platform needs prior permission from RBI

The RBI has specified in the directions for NBFC-P2P lending on Para 16 that the prior approval became mandatorily for NBFC-P2P lending  to be taken-

In case any allotment of shares in aggregate holdings of any individual or group gets equivalent to 26 per cent along with more of the paid-up capital of the NBFC-P2P lending, either any acquisition of an NBFC-P2P lending that includes any progressive increase over a period of time that results in transferring of such shareholdings, or its acquisition or 26 per cent or above equity paid up capital of the NBFC-P2P lending requires the NBFC-P2P lending to take prior approval from the RBI.

In case there are some managerial changes in the NBFC-P2P management of more than 30 per cent of its directors, excluding the independent directors, then NBFC-P2P requires prior permission from the RBI, etc.

Specific Conditions when prior approval is not mandatory from RBI

The RBI has duly specified under the directions for NBFC-P2P that prior approval is not mandatorily required if any shareholding is going below 26 per cent because of its buyback of shares or any reduction in shares might be possible because of the court order. In that scenario, the NBFC-P2P lending platform must inform the RBI within one month since it is a different occurrence within shares.

READ  Peer to Peer Business Lending in India & Abroad (P2P Lending)

Process for Drafting the Application for Seeking P2P Lending Platform Permission from RBI

The RBI, in its directions for the NBFC-P2P, has already informed the guild lines for interested NBFC while seeking a grant to act as a P2P lending platform as follows-

NBFCs are required to specify the detailed information related to their proposed directors, including their shareholder’s details, in a prescribed format.

NBFC are required to specify the sources of such proposed shareholders of directors acquiring shares in the concerned NBFC-P2P

Directors are required under the NBFC-P2P to give their declaration on the proposed shares, mentioning the fact of not being associated with any other not incorporated body accepting deposits.

It is mandatory for all directors, along with the shareholders, to provide their declaration letter for not being associated with any company previously whose request for the certificate has been duly rejected from the end of the RBI.

It is most important for the directors, including the shareholders, to specify in the declaration that they have not been previously engaged in any criminal offence or having on the pendency of any type of criminal or civil nature of cases, including such possible proceeding under 138 section of Negotiable Instrument Act, 1881.

A report from the end of the Banker’s required for NBFC-P2P on the proposed directors or shareholders. After complying with the above details in a prescribed form, the application for the certificate must be given to the Regional Office of Non-banking Supervision of the bank where the company is registered.

Registration Guidelines

Process for registration as a P2P lending Platform- According to the RBI directions, all interested NBFC-P2P are required to apply an application for seeking a certificate from the Department of Non-banking Regulation, RBI.

The process to register for a prospective P2P lending platform

For the prospective P2P lending platforms, the RBI will grant permission for setting up and operating those P2P lending platforms as an in-principle form of approval as RBI deems to be satisfying after seeing the required conditions are being fulfilled accordingly. Such approval in terms of in-principle form from the RBI will be valid for a period of the next 12 months from the date of its approval. Such entities applying for the prospective P2P lending platform are not required to wait for a period of 12 months. The RBI is providing tenure of 12 months to these entities for settling up in case they are ready to set up easily in months and fully comply with all the other required guidelines established by RBI. Then, entities can approach the RBI and share their report on compliance. If the RBI deems to be satisfied with the compliances, then a grant of in-principle form of approval will be awarded to them. They could further commence their business as an NBFC-P2P lending platform, etc. In comparison, this process was not with those existing companies’ P2P lending platforms. They are supposed to apply for the registration letter within a period of 3 months from the date of effectiveness of RBI directions, i.e. October 4th, 2017. Existing companies are allowed to continue their business as a P2P  lending platform till to the rejection of the certificate for P2P lending from the RBI ends.

The Reserve Bank of India is capable in some situations of revoking or cancelling the permission of NBFC-P2P lending platform, especially when the concerned NBFC-P2P has opted to terminate or stopped the commencing of P2P lending business in India or  In case the concerned company has not complied with the rulings or directions specified by the RBI to comply for being an NBFC-P2P lending platform, or, In circumstances, where the companies are not eligible to hold the position of NBFC-P2P lending Platform, or, Either the concerned NBFC Company itself, fails in complying any direction specifically issued by the bank or has not yet maintained the records of accounts, either publish or disclose their financial status in accordance to comply with any law or issued direction by the bank itself. Or if the company fails to offer or furnish its financial books of accounts along with the other necessary documents for inspection at the time of demand by the bank. In all these situations, the RBI is authorized to cancel the certificate of the NBFC-P2P lending platform, etc.  

Qualifying Criteria for Lenders and Borrowers

Criteria to be a Lender and borrower on a P2P Lending Platform-

The RBI has prescribed in its guidelines or directives that a lender may be an individual or any legal entity seeking a loan. There is no such specific guideline for being a participant from the end of RBI, and the platforms themselves will create a board-approved policy that will set criteria for qualifying as a participant in the P2P lending platforms. The same qualifying will be applicable to the borrowers for lenders in the P2P lending platform.

Individuals apply for Lenders and borrowers on the P2P platform.

Any individual or kind of legal person is capable of applying to be a lender on the P2P lending platform by complying with the specified qualifying eligible criteria of the concerned P2P lending platform. However, the RBI has not justified any specific requirement or steps to be followed by any lender. Usually, the P2P lending platform formulates its own board approval policy or kind of basic eligibility, and the same needs to be fulfilled by the interested individual or any legal person, etc.

Guidelines for Lending & Borrowing on P2Pplatforms

The limit decided by RBI in terms of lending on P2Plending platforms for special lenders under subparts 2 and 4 of its Prudential norms is that a lender is not authorized to lend more than INR 10 lacs on all P2Plending platforms and is restricted with the value of lending to a single borrower is INR 50,000 on all such platforms, etc. The same condition will be applicable for the borrowers under the specified sub-part 3 of the RBI Prudential norms that a sum of not more than INR 10 lacs can be borrowed by a borrower using all the P2P lending platforms. The borrower is only allowed below INR 50,000 amount to be borrowed from a single lender at a time.

 Compulsory obligations from the end of Participants-

It is required by the RBI directive that the concerned participants are mandatorily engaged in an agreement where the terms and conditions need to be specified along with their consent among the borrowers, lenders, and the NBFCs-P2PPlatform.  

The P2Pplatforms are not authorized to disburse the loan amount until the individual lenders approve the borrower’s request and the concerned participant has not signed the agreement of the loan. Moreover, there will be clarification of the process will be done between the lender and borrower and how the loan will be executed accordingly. However, the identity of the lenders will not be disclosed to the borrowers.

Time of Deposit the Lender Loan Amount-

Accordingly, the lender will be allowed to deposit the loan amount before registration or getting engaged in any lending agreement between the borrowers. Under this, the lender is bound to deposit the sum early in order to avoid unnecessary delay in the lending process.

Interest Rate to be decided-

The RBI, under its directive of P2Plending, has specified the process of deciding the interest rate of lending on the basis of the borrower’s identity, his interest rate desire, and credit score. Moreover, the lender is aware of the borrower’s personal identity and desired interest rate, including the credit score from the end of the NBFC-P2P lending platform. The borrower will specify his requirement for a loan at the time of loan request and the interest sought, etc. Meanwhile, the concerned NBFC-P2P platform will conduct bidding to sort out the rate of interest between the lenders, and when the interest rate is near less or more or equal to the desired borrower rate of interest, it will stop the bidding process.

Scope of Operations

Kinds of loan disbursed under P2PPlatform-

Under its direction, the RBI specified that only an unsecured kind of loan can be further disbursed through the P2P lending platforms. Platforms are restricted from selling any product except specific loan insurance products, etc. The platform will disburse the loan amount for a tenure not exceeding 36 months as specified by the RBI under sub-part 5 of prudential norms.

Operational Directions for Platforms NBFC-P2P

The RBI has specified few specific guidelines for NBFC-P2P while purporting their operational business- NBFC-P2P are required to undergo a board-approved policy where the qualifying criteria of being participants with rules for matching lenders with borrowers using non-discriminatory manners are duly prescribed. The platforms need to clarify their costs of services.  

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The RBI, under its directions, has made liable the NBFC-P2P platforms regarding the ongoing activities on the platforms along with the acts of their recovery agents.

The RBI has made responsible to the NBFC-P2P platforms for the confidentiality of information pertaining to the participants. Etc. The platforms are bound to display a warning for the end of RBI that “RBI is not responsible for the correctness of any kind of statements or representations either made or expressed by the NBFC-P2P lending  platforms nor provide any guarantee for the repayments of lending loans on the same P2P platforms.”

RBI on Escrow Account & Transfer of Funds

Escrow accounts refer to those accounts where a third party receives and disburses amounts, especially for the primary transaction parties, based on the agreed terms and conditions by the transacting parties. It is widely used in the real estate business, mergers and acquisitions, issuance of stock, or online purchase and sale of shares.

Appointment of Trustee-

 Under the RBI direction, the trustee must be appointed by the same bank that maintains the escrow account. The trustee appointed by the bank is bound to manage the operations of the escrow accounts on the basis of the directions or instructions issued from the end of the lender or borrower and the P2P platform. The trustee is authorized to give instructions to the bank and directly handle the operations of the escrow account on behalf of the lender, borrower, and platform during the fund’s transfer mechanism, such as transferring from bank to bank and restricting the cash transferred under the para 9 of the RBI direction.

Process of transfer of Funds-

In its directions, the RBI specified under para 9 that transfer of funds might be possible between the participants and the platform using the escrow account. The concerned P2P lending platform is required to hold at least two escrow accounts, which the trustee will operate. The two escrow accounts are required to keep the funds received from the end of lenders for disbursal of amount while the other one is required to keep the collection of funds received from the end of the borrowers, etc.

NBFC-P2P Reporting Required Under RBI

The RBI, in its direction specified under para 17(2), held it mandatory for the P2Plending platforms to submit the following statements before the Regional office within a period of 15 days after the completion days of the quarter.

NBFC-P2P should mention their statement, including the number and the amount with respect to the loans, such as disbursed amount during the quarter, closed amount during the quarter with the outstanding amount at the beginning with the ending of the said quarter with the number of borrowers and lenders outstanding as the end of the quarter.

NBFCs P2P are also required to summarize the number and the amount available in the escrow account, along with those amounts divided into funds separately received from the end of lenders and also the funds received from the borrower side, etc.

NBFC-P2P must mention the number of complaints received from the end borrowers and lenders and specify the resolved complaints from the beginning and end of the quarter. 

Basic Compliance is required when changing the address, director’s auditors, etc.

In its direction, the RBI specified that the NBFC-P2P platforms are required to inform within a period of 1 month from the date of such changes such as change in address, telephone number, or fax number of the registered NBFC-P2P office.

In case the name and address of the auditors of the NBFC-P2P have changed and if the specimen signatures of the duly authorized to sign on the NBFC-P2P behalf might be changed. In all such circumstances, it has been mandatory for the NBFC-P2P to inform on an immediate basis to the Immediate Office of the non-banking supervision of the concerned jurisdiction of the bank.

RBI direction related to Business Continuity Plan for NBFC-P2P

In its direction under para 14(3), the RBI clarified for the NBFC-P2P to hold a business-approved continuity plan to keep documents or information related to servicing of loans for full tenure in case of closure of any platform.

RBI, in its direction under Para 15 for the NBFC-P2P platforms, has specified a fit and proper guideline –

The NBFC-P2P platforms will make sure that they have their board-approved policies from the end of directors.

The NBFC-P2P are bound to comply that their directors, during their appointment and certification process, must comply with the direction issued by the RBI, and the same information must be communicated with the bank on a half-yearly basis.

The NBFC-P2P platform will ensure that they obtain declarations or undertakings from their directors’ end within the RBI’s specified formats.

The NBFC-P2P must get a deed of covenants duly signed by their directors in prescribed forms.

The NBFC-P2P is required to inform the changes in directors, in their key managerial positions, etc., immediately to the office of the non-banking supervision of the concerned jurisdiction of the bank within 15 days from such occurrence.

The NBFC-P2P platforms are required to furnish their annual financial statements duly submitted to the regional office. In case RBI feels fit and secure to remove any director from the NBFC-P2P after assessing the reports submitted in the public interest. The RBI is capable of doing so.

RBI Requires NBFC-P2P Transparent In Their Operations

In its direction, the RBI specified a kind of transparency from the end of the NBFC-P2P lending platform to disclose all such mandatory information between the borrower, lender, and the participants.

It is mandatory to disclose the personal identity of the borrowers to the lenders in terms of their loan request amount, the rate of interest a borrower is seeking, and the credit score mainly furnished from the end of the NBFC-P2P platform.

The lender is authorized to know about the terms and conditions mentioned in the loan agreement, about the return interest and implied taxes, etc.

In the same way, a borrower is entitled to get information so as to view the proposed loan amount and the interest rate on the loan amount rather than receiving any kind of personal information such as an address, contact details of the lenders, etc.

Leverage Ratio for NBFC-P2P & Interest Rate Charged

The RBI specified under para 7 (1) (ii) as total liabilities divided by net-owned Fund. And mentioned in para 7(1) mentioned NBFC-P2P to not exceed the leverage ratio 2.

NBFC-P2P platforms are required to maintain their non-performing assets performance under para 11(1) (iii) of the RBI direction on a monthly basis.

Para 11(3) submits the RBI direction for the interest rate charged in an annualized format of percentage rate of interest.

Grievance Redressal & Disclosure Required

The RBI has issued under its direction for NBFC-P2P platforms to follow the fair practices code guidelines, and the same must be uploaded and mentioned on their business websites. The NBFC-P2P board of directors will communicate their reports on the proper compliance of such codes over a period of time, and any type of disclosure of confidential information duly received by participants will not be circulated or disclosed to any third party without getting the consent of such participants. Etc.

The RBI has prescribed a grievance mechanism for the NBFC-P2P, and this grievance policy is required to be followed in the NBFC-P2P with a board-approval grievance mechanism. NBFC-P2P is required to display the name, including the contact details of the concerned Grievance Redressal Officer so that individuals can easily contact in times of dispute in the NBFC-P2P lending platform. Suppose the said dispute is not addressed within the period of 1 month from the date of addressing the dispute. In such a situation, the participant either individual may approach the bank department for its appeal and redressal (Customer Education and Protection Department). Such Disputes must be resolved on the basis of the board-approved policy and the time period mentioned in the policy, which is not to be more than 1 month’s period in any circumstances. 

Under subpart 1(iii), under the transparency and disclosure requirements, the RBI made the NBFC-P2P lending platforms disclose their credit assessment/score methodology and the factors considered in its calculation publicly on their official website.

NBFC-P2P is more likely to disclose the data or information use limitation and its protection. NBFC-P2P is bound to mention their grievance redressal mechanism on the business website and is also required to publish the portfolio performance of their non-performing assets/shares on a regular monthly basis, etc.

The NBFC-P2P lending platform is required to be a member of credit information companies (CIC) and will publish all the credit prehistory data along with the present credit score. The NBFc-P2P are required to maintain the records of their borrower credit information.

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The NBFC-P2P under the RBI directions are required under para 16(4) & 16(5) to furnish a public notice while purporting the sale or transfer the ownership by the sale of shares or either control in the transfer of shares with or without the sales of such shares, etc. must comply with furnishing a public notice prior the date of commencing such acts.

Usually, such public notice will be furnished by both NBFC-P2P and the other interested parties who have obtained any written permission from the bank’s end.

The RBI has specified under para 16(5) that such public notice must bear the intent to sell, transfer, control ownership, the reasons behind transferring, etc. And the same notice must be published in a national newspaper along with the local newspaper, etc.

Conclusion.-

After acknowledging all previous incidences globally, the RBI regulated the P2P lending platform businesses within the country and formulated Master Directions issued on the 4th of October 2017 for the P2P lending business. In its direction, the RBI specified the nature of the Direct Selling Agent (DSA) between the P2P lending platforms and mandated the provision of a certificate for those DSAs under the registration of NBFC-P2P. RBI intends to promote a fair practices code among the NBFC-P2P lending platforms to safeguard the interest of lenders, borrowers participants, etc.  

FAQs

  1. What are the regulations on P2P lending?

    Under its direction, the RBI has specified that only an unsecured kind of loan can be further disbursed through the P2P lending platforms. Platforms are restricted from selling any kind of product except specific loan insurance products, etc. The platform will disburse the loan amount for a tenure not exceeding 36 months as specified by the RBI under sub-part 5 of prudential norms.

  2. Is P2P lending regulated?

    Yes, P2P lending is regulated by RBI. According to RBI, only a NBFC can get registration of NBFC-P2P under RBI regulations. All NBFC-P2P lending platforms must have a certificate of registration from the RBI. As per RBI regulations, each existing or Non-banking NBFC-P2P lending platform is required to register with the Department of Non-Banking Regulations, Mumbai.

  3. What are the rules for P2P lending in RBI?

    In its direction for the NBFC-P2P lending platform, the RBI has a list of rules and regulations that need to be followed in terms of their registration, operation, fair practice, and grievance resolution mechanism. It has also been mandatory for the NBFC-P2P lending platform to disclose mandatory information with the lenders, borrowers, and participants so as to carry out fair competition in the market. The RBI regulations are intended to safeguard the interests of individual lenders, borrowers, participants, etc.

  4. Who regulates P2P?

    The Reserve Bank of India, under the Ministry of Finance, incorporated in the year 1935, is responsible and liable for making regulations for NBFC-P2P lending platforms in India just to safeguard the interest of persons associated with the business of P2P lending. All the existing and non-existing P2P lending platforms are held to follow the RBI regulations to operate in the P2P lending market.

  5. What are the requirements for an NBFC P2P license?

    Process for registration as a P2P lending Platform- According to the RBI directions, all interested NBFC-P2P are required to apply an application for seeking a certificate from the Department of Non-banking Regulation, RBI. NBFC-P2P requires a net owned fund value of above INR 2 crores while seeking a grant of NBFC P2P license to operate as a P2P lending platform from the RBI. The RBI has only authorized the NBFC to perform the business of lending platforms. All NBFC-P2P requires a certificate of authorization from the end of RBI in case they are going to start or already have started the business of lending services.

  6. Which P2P lending apps are approved by RBI?

    The RBI has approved several P2P lending applications in India for lenders and borrowers such as Bharat Pe, Jupiter, Cred, etc.

  7. Which loan apps are permitted by RBI?

    The RBI has approved several P2P lending applications in India, such as Lazy Pay, Loan Front, Pocketly, Pay Rupik- online loan app, Rapid Paisa, etc. A list of 72 applications are being permitted to operate the loan facilities in India from the end of RBI.

  8. Is P2P lending regulated by RBI?

    Yes, the Reserve Bank of India is regulating the sector of P2P lending platforms. The RBI has issued a set of guidelines which is required to be followed by the NBFC-P2P lending platforms within India. The RBI has formulated such rules and regulations to protect the P2P lending market and secure the interest of persons associated with these P2P lending platforms.

  9. Is the Ring app RBI approved?

    Yes, the RBI has approved the Ring app in India. Basically, Ring App is a registered NBFC that provides credit using its own India-developed application. To know about the list of registered and duly approved P2P lending apps by RBI, requires to visit the official website of RBI and check out the notification list from RBI.

  10. Which P2P lending is the best?

    There are many available P2P lending applications duly approved by the RBI in the market, such as 12% Club, LenDenClub, Mobikwik Xtra, Cred Mint, etc. Once, a P2P lending app could become the best among others, depending upon the individual's personal experience. One should always check the reviews and conduct market research to find the best P2P lending app.

  11. What are the restrictions on lending by RBI?

    In its direction, the RBI formulated the rules and regulations to carry out the operation of NBFC-P2P. One of the strict restrictions from the RBI that NBFC-P2P lending platforms is that a lender will not raise any deposits under the RBI Act, 1934, debar from lending on its own, or can't arrange any credit enhancement, and are not allowed to discriminate on the basis of sex, caste and religion in terms of lending, etc.

  12. What are the restrictions on bank lending?

    The RBI has restricted the bank in many aspects and limited bank lending. One of the restrictions from RBI is the banks are required to maintain a minimum net demand and time liabilities (NDTL) at a value of 4% in cash form, etc. Also, the banks are restricted from making any commitments for granting any type of loan or advances under the Banking Regulation Act. 

  13. What is the lending limit for RBI?

    Under RBI, the banks are allowed to sanction a loan capital of INR 1 crore to MSME so as to avail their working capital and requirement of their term loan as specified under the Master Direction on MSME lending dated 24th July 2017.

  14. What are the restricted functions of RBI?

    According to section 19 of the RBI Act, the RBI has some kind of restrictions in terms of functions; here, the RBI is restricted from getting involved in any type of trade either directly or indirectly, And the RBI can't compete with other commercial banks, or RBI it prohibited to receive and make advice of loan for the immovable properties.

  15. What is the new rule of RBI about loans?

    The RBI has guided the banks in the form of some mandatory instructions related to penal charges in loan accounts so as to ensure the transparency and disclosure of the said penal charges along with the interest rates in loan accounts. Such guidelines will be made effective from 2024, 1st January. 

  16. What are the new norms of RBI on digital lending?

    Based on the issued circular dated 2nd September 2022, RBI in Para 1 of Annexure 1 specified that issued guidelines will apply to digital lending, and the services provider will be considered LSP. Now, the LSP interfaces with the borrower and further appoints a Nodal officer to resolve their grievances, etc.

  17. What are the new RBI guidelines for digital lending?

    The Reserve Bank of India issued a circular on digital lending and stipulated some guidelines regarding digital lending and their service provider to be known as LSP. The RBI issued guidelines to encourage responsible lending and secure the interest of borrowers, etc.

  18. What is the rule of digital lending?

    RBI gave the Rule on digital lending to ensure from the end of regulated entities that activities like loan service, repayments, etc., must be executed by the borrower directly in their regulated entity bank account rather than any pass-on accounts or pool account of either third party, etc.

  19. What are the new RBI rules?

    The Reserve Bank of India has regulated a new set of rules for the customers of the banks to allot them secure deposit lockers and made them enter into a new agreement. The banks must renew their agreements between customers by at least 50 %.

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