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Reserve Bank of India proposes guidelines for P2P platforms

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Reserve Bank of India proposes guidelines for P2P platforms

The ReserveBank of India issued a consultation paper on peer-to-peer, or P2P,lending in the country, proposing several norms to the sector.

The proposed regulatory framework encompasses P2P platforms'permitted activity, prudential regulations on capital, governance, businesscontinuity plan and customer interface, apart from regulatory reporting, thecentral bank said April 28.

The RBI suggested bringing P2P lending platforms under itpurview of regulation by defining them as nonbanking financial companies. Itwas also proposed that P2P platforms can only register as intermediaries andshould be prohibited from being used for any cross-border transaction.

In addition, the central bank recommended that P2P platformsshould have a minimum capital of 20 million rupees, adding that a leverageratio may be prescribed so that the platforms do not expand with indiscriminateleverage.

Given that the central bank has powers to regulate entitiesthat are in the form of companies or cooperative societies, it also proposedthat all P2P platforms run by individuals, proprietorship, partnership orlimited liability partnerships adopt a company structure.

As of April 29, US$1was equivalent to 66.37 Indian rupees.