RBI’s Bold Move: Stricter Regulations for P2P Lending Platforms to Boost Transparency | Economy & Policy News

RBI Tightens Rules for NBFC-P2P Lending Platforms to Enhance Transparency

The Reserve Bank of India (RBI) has introduced stricter regulations for Non-Banking Financial Company Peer-to-Peer (NBFC-P2P) Lending Platforms to bolster transparency and compliance. According to the newly issued master direction, these platforms are now prohibited from marketing peer-to-peer lending as an investment product with features such as tenure-linked assured minimum returns and liquidity options.

Additionally, NBFC-P2P Lending Platforms are barred from cross-selling any insurance products intended as credit enhancements or credit guarantees. The new guidelines also mandate that no loans be disbursed unless there is a proper match between lenders and borrowers as per a board-approved policy.

The RBI first set out guidelines for P2P lending in 2017, where these platforms serve as intermediaries providing online marketplaces for lending and borrowing. However, some platforms have recently engaged in practices violating the 2017 Master Direction, such as contravening prescribed fund transfer mechanisms and presenting P2P lending as an investment product with assured returns and liquidity options.

In response to these violations, the RBI has amended its guidelines to enforce compliance more strictly. The revised regulations are effective immediately.

Published: Aug 16, 2024 | 6:43 PM IST

Original Story https://www.business-standard.com/economy/news/rbi-tightens-norms-for-p2p-lending-platforms-to-improve-transparency-124081601435_1.html
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