On August 16, 2024, the Reserve Bank of India (RBI) issued revised Master Directions on Non-Banking Financial Company – Peer to Peer Lending Platform (Reserve Bank) Directions, 2017.
These amendments aimed to enhance transparency, compliance, and investor protection within the P2P lending industry.
Here are some of the key changes introduced by the RBI:
Time limits on settlements of proceeds received from lenders and borrowers:
- P2P NBFCs are now required to operate through two trustee-managed escrow accounts: one for collecting lenders’ money for disbursals and another for collecting borrowers’ repayments.
- The settlement of proceeds between lenders and borrowers must be done on a T+1 basis, ensuring faster and more efficient transactions.
Other important changes:
- Prohibition of Assured Returns and Liquidity Options: P2P platforms are now prohibited from offering guaranteed returns or liquidity options to lenders. This ensures that lenders are fully aware of the inherent risks associated with P2P lending.
- Tighter Lender-Borrower Matching Policies: The RBI has mandated stricter guidelines for matching lenders and borrowers. This includes more rigorous due diligence on borrowers and transparent disclosure of loan terms.
- Lending Limits and Net Worth Requirements: Individual lenders are now subject to a cumulative lending limit of Rs. 50 lakh across all P2P platforms. Additionally, lenders exceeding Rs 10 lakh in lending must provide a net worth certificate.
- Increased Transparency and Disclosure: P2P platforms are required to provide more detailed information about their operations, fees, and risk factors to both lenders and borrowers.
- Stricter Cybersecurity and Data Protection Measures: P2P platforms must adhere to stringent cybersecurity standards to safeguard sensitive customer data.
These changes reflect the RBI’s commitment to ensuring the safety and security of investors while promoting responsible lending practices within the P2P lending industry.
