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Are you planning to start one of the peer to peer lending platforms in India? Secure a Peer to Peer Lending License with consultants at Enterslice effortlessly in India.
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Peer to Peer (P2P) lending in India is an innovative financial model that connects borrowers directly with lenders through online platforms. These platforms enable individuals and OBCEs (Other Body Corporate Entities) to raise loans and repay them with interest. By eliminating traditional financial intermediaries, P2P lending offers higher returns to lenders and easier access to funds for borrowers. Getting a P2P License from the RBI will help you meet standards for due diligence, transparency, compliance, cybersecurity, and risk management in the digital lending industry.
Under the RBI’s regulations, P2P platforms are recognized as Non-Banking Financial Companies (NBFC-P2P). They are required to follow strict norms relating to data security, disclosure of information, interest rate setting, and risk management. Experience smooth, compliant, and hassle-free registration of your P2P lending platform with Enterslice, your trusted compliance partner, having a proven reputation of serving thousands of clients in the fintech industry.
High-growth Trajectory (21% CAGR Projected)
About 26 NBFC P2P Entities Registered (March, 2024)
Primarily Serve Unsecured Personal Loans & Small Credit
Key Channel for Underserved Borrowers in Tier-2/3 Cities
Must Maintain Escrow/Trustee Arrangements
Mainly Small Ticket Needs (Rs 50,000 to Rs 5 Lakh)
Ensure compliance, build investor confidence, and operate legally in India's dynamic financial landscape with NBFC Peer to Peer Lending Registration.
Classifying the characteristics of a P2P License helps in understanding its benefits, requirements, and operational framework. These features define how peer to peer lending operates and the legal compliance involved.
P2P lending platforms operate entirely online, enabling quick and seamless transactions without the need for physical interaction between lenders and borrowers.
P2P platforms connect lenders and borrowers without the necessity of any existing relationship, ensuring accessibility for all users.
A P2P License is a legal requirement for operating a P2P lending platform in India, ensuring compliance with RBI regulations.
Lenders have the autonomy to choose borrowers to invest in, based on their risk preferences and investment strategies.
Some platforms offer a secondary market, allowing lenders to transfer or sell their loans to other investors if they wish to exit early.
A P2P Lending License is mandatory for operating peer to peer lending platforms in India. This license ensures that the platform functions within the regulatory framework set by the Reserve Bank of India (RBI), while offering secure, transparent, and cost-effective lending solutions.
Both borrowers and lenders benefit from such licensed platforms due to lower costs, better access, and enhanced trust. The list of benefits of securing a P2P lending license is as follows:
Platforms holding a Peer to Peer Lending License can provide loans at comparatively lower interest rates since they operate with reduced overhead expenses. This makes borrowing more affordable than traditional banks.
A Peer to Peer Lending License enables platforms to serve individuals who may not qualify for loans from conventional institutions, such as those with limited credit history or without collateral. This promotes financial inclusion and expands access to credit.
Licensed platforms offer clear terms and conditions, giving borrowers the ability to compare loans easily. Lenders also enjoy more control over whom they lend to, ensuring a transparent and user-friendly process.
With a peer to peer lending license, platforms use advanced methods to assess borrower creditworthiness. This lowers the risk of default and increases repayment security for lenders.
A peer to peer lending license contributes to the diversification of the financial ecosystem. By offering alternative funding channels, these platforms reduce dependency on banks, encourage competition, and foster innovation in financial services.
Obtaining a P2P License in India requires careful preparation and compliance with RBI regulations. The process involves researching regulatory requirements, forming a legal entity, preparing a compliant business plan, developing a robust lending platform, and submitting the necessary documentation and fees to the Reserve Bank of India. Once approved, continuous compliance is essential to maintain the license.
Every NBFC-P2P entity, whether already operational or planning to start, must submit an NBFC Peer to Peer Lending Registration application to the RBI’s Department of Regulation, Mumbai branch, using the prescribed format. Existing NBFC-P2Ps must file their applications within three months of the issuance of the RBI guidelines. This step is the first official requirement to begin the licensing process.
Before submitting the application, it is essential to ensure that all eligibility requirements are met, including incorporation in India, compliance with the Companies Act, a minimum net owned fund of ₹2 crores, and necessary technological and operational capabilities. Meeting these criteria is crucial for the RBI to proceed with reviewing the application.
Once the RBI is satisfied with the eligibility requirements, it may issue in-principle approval for establishing a P2P lending platform. This approval allows the applicant to move forward with development and compliance preparations and is valid for twelve months from the date of issuance, during which the applicant must complete all necessary preparations.
Within the twelve-month validity of the in-principle approval, the applicant must build and test the technology platform, finalize all legal documents, and regularly update the RBI on compliance with the conditions of approval. This stage ensures that the platform is technically and legally ready to operate in accordance with regulatory standards.
After verifying that all conditions have been met and the platform is ready, the RBI may issue the Certificate of Registration as an NBFC–P2P. This registration will often come with specific conditions set by the RBI, which the company must comply with throughout its operations to maintain its license.
The regulatory authority generally requires a timeline of approximately 9 months to process and grant a Peer to peer lending license from the date of application. Please note that this timeline may be extended in the event of regulatory delays. Below is a generalized breakdown of the process.
This initial phase involves preparing the comprehensive business plan, financial projections, and completing the necessary due diligence on founders and key stakeholders, which typically takes 2 to 3 months.
It takes approximately 1 month to finalize and formally submit the complete license application package, along with all required supporting documents, to the regulatory authority.
The authority conducts a thorough examination of the application, assessing the business model, compliance frameworks, and financial soundness. This intensive review process generally takes 4 to 5 months.
Upon a successful review, an "Approval In-Principle" is issued. This stage, which may involve fulfilling specific pre-licensing conditions, typically takes about 1 month to complete.
The final Peer to Peer lending license is issued once all conditions are met. Obtaining the official license certificate from the authority takes approximately 15 to 30 working days.
To obtain a Peer to Peer Lending License in India, the following documents must be prepared and submitted:
Certificate of Incorporation – Proof of the company’s legal registration in India.
Memorandum of Association (MoA) & Articles of Association (AoA) – Detailing the company’s objectives and governance structure.
Proof of Entrepreneurial and Technological Resources – Evidence showing the company possesses the necessary expertise and technology to operate a P2P lending platform.
P2P Lending Platform Portal – Details and access to the company’s functional lending platform.
Business Plan – A comprehensive outline of the company’s business model, strategies, and operational framework.
Clean Balance Sheets – Financial statements that are free from any transactions initiated between borrowers and lenders to ensure transparency and compliance.
Peer to peer lending platforms, enabled by a P2P Lending License, are reshaping borrowing and lending by creating a seamless digital marketplace where lenders and borrowers connect directly. Lenders can choose borrowers based on risk appetite and access detailed credit histories to make informed decisions while diversifying investments to reduce risk. Borrowers submit essential documents such as proof of identity, address, and income, along with additional supporting papers as required. Once reviewed, they gain access to competitive funding directly from investors, bypassing traditional banks. Valued at around ₹7,000–8,000 crore, the Indian P2P lending industry currently has about 26 RBI-registered platforms. With growing interest from entrepreneurs and a projected CAGR of 21% between 2024 and 2030, this sector is set for significant growth, making the P2P lending market a transformative force in India’s financial landscape.
The eligibility criteria for obtaining a P2P lending license are as follows:
Enterslice has proven its expertise in regulatory consulting, with over a decade of experience in acquiring P2P Licenses for passion-driven entrepreneurs. Our track record and dedication make us one of the most trusted business consulting firms in this space.
P2P lending platforms are type of financial lending platforms that connects borrowers and lenders, without the use of traditional financial institutions.
The in-principle approval given by RBI for a P2P lending license would be valid for 12 months from the date approval is granted.
The assured rates of returns cannot be obtained through this form of lending, even after getting a P2P license. However, this form of lending has caught the spotlight in the lending process between lenders and consumers. Also, it has turned out to be highly profitable and rewarding.
The safety of P2P lending depends upon factors like lending money to low-risk borrowers after proper verification.
The Peer to peer lending license system is a platform that allows participants to borrow and lend sums of money without relying on the prevailing conventional financial system.
Specific prerequisites for getting the Peer to peer lending license are that the company should be registered in India, have adequate capital, directors, a legitimate arrangement of information technology system, and meet other criteria discussed above.
The loan amount borrowed from peer to peer digital lending platforms typically ranges from ₹30,000 to ₹5 lakh for personal use. For business purposes, borrowers can obtain loans of up to ₹10 lakh.
The net owned fund requirement for acquiring a P2P lending license from the Reserve Bank of India is Rs 2 Crore.
The company, considered the most prominent Peer to peer digital lending platform in India, is the Faircent for the marketplace using the P2P lending method.
The major revenue streams for P2P lending platforms with a P2P license are success fees, premium membership fees, and secondary market transaction fees.
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Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
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