 "RBI raises P2P lending limit five-fold, cap on single-party exposure stays")
The Reserve Bank of India has raised the lending limit of Peer-To-Peer (P2P) platforms five-fold. The apex bank said in a statement on developmental and regulatory policies issued on December 5, that the aggregate exposure of a lender to all borrowers at any point of time, across all non-banking financial company peer-to-peer platforms, will be capped at Rs 50 lakh, against Rs 10 lakh at present.
It said, “A review of the functioning of the lending platforms and lending limit was carried out, and it has been decided that in order to give the next push to the lending platforms, the aggregate exposure of a lender to all borrowers at any point of time, across all P2P platforms, shall be subject to a cap of Rs 50 lakh.”
The cap on the exposure of a single borrower, however, remains at Rs 50,000 across all NBFC peer-to-peer platforms.
Market players have welcomed the decision as it will give a much-needed boost to the segment. Bhavin Patel, Co-Founder & CEO, LenDenClub, “Now, P2P lending stands equal to other investment options like MF, FD, bonds, and PMS. Most Indian investors will fall within this cap of Rs 50 lakh.”
“This move is a big positive for all P2P companies and investors and shows the RBI's trust and confidence in P2P lending to resolve the problem of existing credit gap in the market. The announcement should definitely attract more investors towards P2P platforms. Also, we expect the existing investors on our platform to scale up their investments. Also, more HNIs would now look at P2P lending as an investment option, which is a very positive sign for the industry,” said Abhishek Gandhi, co-founder & CFO, RupeeCircle.
The central bank also did away the requirement of escrow accounts operated by a bank-promoted trustee for the transfer of funds. It also added, “It is proposed to do away with the current requirement of escrow accounts to be operated by bank-promoted trustees for transfer of funds having to be necessarily opened with the concerned bank. This will help provide more flexibility in operations.”
It said, “A review of the functioning of the lending platforms and lending limit was carried out, and it has been decided that in order to give the next push to the lending platforms, the aggregate exposure of a lender to all borrowers at any point of time, across all P2P platforms, shall be subject to a cap of Rs 50 lakh.”
The cap on the exposure of a single borrower, however, remains at Rs 50,000 across all NBFC peer-to-peer platforms.
Market players have welcomed the decision as it will give a much-needed boost to the segment. Bhavin Patel, Co-Founder & CEO, LenDenClub, “Now, P2P lending stands equal to other investment options like MF, FD, bonds, and PMS. Most Indian investors will fall within this cap of Rs 50 lakh.”
“This move is a big positive for all P2P companies and investors and shows the RBI's trust and confidence in P2P lending to resolve the problem of existing credit gap in the market. The announcement should definitely attract more investors towards P2P platforms. Also, we expect the existing investors on our platform to scale up their investments. Also, more HNIs would now look at P2P lending as an investment option, which is a very positive sign for the industry,” said Abhishek Gandhi, co-founder & CFO, RupeeCircle.
The central bank also did away the requirement of escrow accounts operated by a bank-promoted trustee for the transfer of funds. It also added, “It is proposed to do away with the current requirement of escrow accounts to be operated by bank-promoted trustees for transfer of funds having to be necessarily opened with the concerned bank. This will help provide more flexibility in operations.”
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