MUMBAI: Citing some instances of violations of norms by some entities, the Reserve Bank has tightened regulations for peer-to-peer (P2P) non-bank lending platforms with a view to improve transparency and compliance, and to address concerns over their practices violating the 2017 guidelines. The revised guidelines come into force with immediate effect.
A P2P platform should not promote P2P lending as an investment product with features like tenure-linked assured minimum returns, liquidity options, etc, the RBI said Friday in the revised master directions.
As per the revised master direction, a non-banking P2P platform should not cross-sell any insurance product, which is in the nature of credit enhancement or credit guarantee. No loan should be disbursed unless the lenders and the borrowers have been matched/mapped as per the board-approved policy framed, it added..RBI had first issued P2P lending guidelines in 2017. A P2P platform acts as an intermediary providing online platform to the participants involved in P2P lending.
“It is observed that some of these platforms have adopted practices, which were violative of provisions of direction 2017,” RBI said. “Such practices include violation of prescribed funds transfer mechanism, promoting P2P lending as an investment product with features like tenure linked assured returns, providing liquidity options and at times acting like deposit takers and lenders instead of being a platform,” it added.