With the Reserve Bank of India
spelling out guidelines for regulating peer-to-peer (P2P) lending, many of these lenders
are looking at ways to comply with the norms by restructuring
their business models. Further, companies find Rs 10 lakh cap on lending
restrictive, given the phenomenal growth of the sector in the past couple of years.
“The aggregate exposure of a lender to all borrowers at any point of time, across all P2Ps, shall be subject to a cap of Rs 10 lakh and the aggregate loans
taken by a borrower at any point of time, across all the platform, shall be subject to a cap of Rs 10 lakh and the exposure of a single lender to the same borrower, shall not exceed Rs 50,000,” said the RBI
Over the past few years, several variants of online marketplace for loans
have emerged in India, and in several cases institutional finance
is also being channelled through the platform. Several e-commerce websites
too have been facilitating loans
in tie-up with P2P platforms.
“I don’t see that pure P2P lenders
need to tweak their business model, but those who have been of late experimenting with new models might need restructuring.
The cap of Rs 10 lakh on lender is very restrictive, as we have many lenders
who have higher exposure at any given point in time. In fact, their portfolio keeps growing as they keep lending,” said Rajat Gandhi, founder and chief executive officer of Faircent. The company has been growing at about 15-20 per cent every month, with an average monthly lending
of close to Rs 3 crore.
“The new guidelines makes it difficult for high net-worth individuals (HNIs) to participate in the platform,” said Rangan Varadan, founder of MicroGraam.
According to the RBI
guidelines, for P2P NBFCs, the lending
should be restricted to individuals.
Further, the guidelines mandate a leverage ratio of not exceeding two case of P2P NBFCs.
Thus, with capital of Rs 2 crore, a platform can facilitate loans
only up to Rs 4 crore.
“The guidelines does not treat P2P lending
as priority sector lending.
A lot of money in P2P platforms
come through donations and (corporate social responsibility) CSR funds. Now, there would be difficulties in lending
that money. We will have to see how to restructure our platform so that there will be no violation of law,”’ said says Ramakrishna NK, co-founder, Rang De.
is a form of crowd-funding, used to raise loans, which are paid back with interest. Interest rates on P2P platforms
are linked to the risk profile of the borrower.
In a typical rural-centric P2P model, a website publishes a list of loan-seekers from non-governmental organisations (NGOs) or (micro finance
A prospective lender chooses the borrower of their choice, makes payments through an online platform and gets monthly or quarterly payments on the loan, with 6-8 per cent returns. The MFIs
or the NGOs, which are in charge of monitoring the loans, also take care of disbursements and collections at the ground level, and get 6-7 per cent returns. The online platforms that facilitate retain 2-5 per cent as fees. Thus, the end cost of a borrower comes anywhere between 17 and 20 per cent.