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P2P platforms look for biz model restructuring to comply with RBI norms

Rs 10 lakh cap on lending is restrictive, say players

Namrata Acharya  |  Kolkata 

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With the Reserve Bank of spelling out guidelines for regulating peer-to-peer (P2P) lending, many of these are looking at ways to comply with the norms by their business models. Further, companies find Rs 10 lakh cap on 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 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 Thursday. 

Over the past few years, several variants of online marketplace for have emerged in India, and in several cases institutional is also being channelled through the platform. Several too have been facilitating in tie-up with  

“I don’t see that pure P2P need to tweak their business model, but those who have been of late experimenting with new models might need The cap of Rs 10 lakh on lender is very restrictive, as we have many 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 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  

Notably, Varadan has co-founded two online marketplaces —and While is purely a P2P platform with participants being retail investors, involves institutions and banks. in include banks such as   YES Bank, ICICI Bank, and RBL Bank, apart from a number of  

Recently, invested close to $1 million in The company is eying a of close to Rs 500 crore by the end of March 2018, said Varadan. 

Varadan is now planning to register as an NBFC, while as P2P NBFC. By registering as NBFC, would be able to continue providing institutional and direct  

According to the guidelines, for P2P NBFCs, the should be restricted to individuals. 

Further, the guidelines mandate a leverage ratio of not exceeding two case of P2P Thus, with capital of Rs 2 crore, a platform can facilitate only up to Rs 4 crore. 

“The guidelines does not treat as priority sector A lot of money in come through donations and (corporate social responsibility) CSR funds. Now, there would be difficulties in 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,  

is a form of crowd-funding, used to raise loans, which are paid back with interest. Interest rates on 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 institutions) 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 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.

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First Published: Sat, October 07 2017. 21:26 IST
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