CHENNAI: While the recent Reserve Bank of India (RBI) notification treating all peer-to-peer (P2P) lending platforms as non-banking financial companies (NBFCs) is likely to bring some credibility to the business, experts say it’s a battle half won by the fintech firms.
The RBI proposal, they say, might cripple the operations of small players who won’t be able to comply with some of the new requirements such as keeping net available funds of Rs 2 crore.
Explaining this, Brahma Mahesh Khaderbad, co-founder and CEO of FinMomenta, said, “While the legal ramifications are clear, we still need clarification on capital requirement as the current requirement for
NBFCs is to show proof of Rs 2 crore as net available funds. P2P platforms offer an alternative lending option for low-income people who may not be able to secure bank loans due to their poor / non-existent credit rating. Since the P2Ps do not lend from their own pockets — as their role is limited to connecting borrowers with lenders for a fee which is not shown in their balance sheets — this could be deathknell for these firms.”
Echoing similar sentiments, Aditya Kumar, founder & CEO of Qbera, a Bengaluru-based fintech start-up, said that promising Rs 2 crore as agreed capital for a business in which you cannot take deposits or grant loans would be difficult. “While serious and big players can accommodate this, no promoter would be willing to take such risks,” he said, adding that it might also lead to reducing innovation in areas like estimating credit risk and matching algorithms.
“The gap between demand and supply is huge and P2P lending could help bridge this gap to a large extent,” said Rajat Gandhi, founder & CEO of Faircent.com, While the players are anticipating the final guidelines soon, they do not expect RBI to cap interest rates like it did in the microfinance sector.