Mumbai: To protect consumers interest, the Reserve Bank on Monday said that on a peer-to-peer lending (P2P) platform the permissible exposure of a lender to all borrowers should not exceed Rs 50 lakh at any given point of time.
"On a review, it has been decided that the aggregate exposure of a lender to all borrowers at any point of time, across all P2P platforms, shall be subject to a cap of Rs 50,00,000 provided that such investments of the lenders on P2P platforms are consistent with their net-worth," the RBI said in a notification.
The lender investing more than Rs 10 lakh across P2P platforms will produce a certificate to P2P platforms from a practising Chartered Accountant certifying minimum net-worth of Rs 50 lakh.
"Further, all the lenders shall submit declaration to P2P platforms that they have understood all the risks associated with lending transactions and that P2P platform does not assure return of principal/payment of interest," the RBI said in a notification.
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On fund transfer mechanism, it said: "Escrow accounts to be operated by bank promoted trustee for transfer of funds need not be mandatorily maintained with the bank which has promoted the trustee".
As per the guidelines, the transfer of funds under P2P lending happens through an escrow account mechanism, which is operated by a bank promoted trustee.
It requires at least two escrow accounts, one for funds received from lenders and pending disbursal, and the other for collections from borrowers, be maintained.
While talking to ETV Bharat, I2I funding Co-founder Raghavendra Pratap Singh said, "Overall this is a welcoming step for p2p industry, it was a long-awaited demand. Earlier the regulations came in the year 2017 stating a cap of Rs 10 lakh for lending. This step will increase investment in p2p activities."
"However Rs 10 lakh limit on borrowers and of one lender can't be more than 50,000 and it can't be given to a single borrower. This will not be a concern because p2p lending is diversifying risk," Raghavendra added.
"A certificate from a Charted Accountant will be required for getting Rs 50 Lakh which might be a small blockage, but this won't be a big hurdle as RBI is moving in a positive direction, and listening to our demands he further said."
Raghavendra on fund mechanism of escrow bank said, "it will be easier for p2p lenders as one can operate from any bank. Earlier p2p lending used to operate either from ICICI or IDBI bank only. Now operation from any bank will be more easier."
It also mandates that all the transactions through bank accounts, and cash transaction are strictly prohibited.
