RBI has reviewed the extant regulations for P2P Platforms and then issued certain clarifications and amendments vide circular dated 16 August 2024 as New Rules for Peer-to-Peer Lending Platforms (P2P) in India:
Breakdown of the key changes by the Reserve Bank of India (RBI):
1. P2P Platforms only intermediaries:
Lenders bear all the risk (loss of money) if a borrower defaults.
Platforms must clearly inform the lenders about this risk.
2. No Freebies:
Platforms can’t offer any guarantees or insurance on the loans.
They can only offer loan-specific insurance (not covering defaults).
3. Lending Limits:
It can’t lend more than Rs. 50 lakhs across all P2P platforms combined.
If it lends more than Rs. 10 lakhs, it needs a Rs. 50 lakh net-worth certificate.
4. Matchmaking Matters:
Platform provides the rules for matchmaking and choose the borrower-lender and must approve them before a loan is disbursed.
Both lender and borrower sign a loan agreement.
5. Secure Transactions:
Money flows through two separate escrow accounts (like a safekeeping service) managed by a bank.
One account holds lenders’ money before disbursement.
The other account holds borrowers’ repayments.
