Friday, 29 September 2017

Peer-to-Peer Lending

Reserve Bank of India, vide notification No. DNBR. 045/CGM (CDS)-2017 has specified that an institution that carries on ‘the business of a peer to peer lending platform’ shall be a Non-Banking Financial Company.

The term “the business of a peer to peer lending platform” shall mean the business of providing under a contract, the service of loan facilitation, via online medium or otherwise, to the participants who have entered into an arrangement with that platform to lend on it or to avail of loan facilitation services provided by it.

RBI had earlier released a consultation paper on P2P lending platforms where the central bank had proposed certain minimum eligibility criteria for registration of such platforms which were necessary in public interest and for regulation of such platforms.

Recognition of the P2P platforms as an NBFC has been a long standing demand of the industry and it provides a lot of clarity on how to run the business.

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