RBI declares stricter rules for P2P lending to improve transparency

Mumbai: The Reserve Bank of India has announced stricter norms for Non-Banking Financial Companies- Peer-to-peer lending Platforms (NBFC-P2P Lending Platform).  The revised rules aim to improve transparency and compliance of P2P platforms. Under the amended guidelines, P2P platforms should not promote peer-to-peer lending services as an investment product. They cannot offer features like tenure-linked assured minimum returns, liquidity options, etc.

Other rules underlined for NBFC-P2P lending platforms include:

• NBFC-P2P lending platform should not cross-sell any insurance product.
• P2P lending entities should only disburse any loan if lenders and borrowers have been matched according to the board-approved policies.
• Such platforms will only act as an intermediary, providing an online platform for the participants involved in peer-to-peer lending.
• They will not act as deposit takers and lenders.

These guidelines were issued in view of violations by certain entities. The revised guidelines have come into effect immediately.

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