RBI guidelines in P2P lending to enable better transparency

The guidelines introduced by the Reserve Bank of India (RBI) on P2P lending will bring a greater degree of transparency and seriousness to the sector, according to the exporters.

i2i funding, a P2P funding company welcomed the much awaited RBI guidelines, considering the guidelines as a defining moment for P2P lending sector. While P2P is considered a credible alternative financing option in India, the guidelines have helped in enhancing the credibility of the sector for masses.

"It will help us get credit information report of a borrower directly and also share delays and defaults in repayments to CICs. This will further resolve our concerns about direct transfer between lenders and borrowers which RBI said in consultation paper," said co-founder i2ifunding, Raghavendra Pratap Singh.

Adding to this, Singh said that these guidelines will bring more transparency in this sector and will force accurate disclosure of data from all P2P players.

"We are quite happy with the way RBI has covered all the points including the structure of the transaction, transparency, right of lender/borrowers and responsibilities of the platform. They have addressed majority of the requirement of p2p platforms by defining payment mechanism and allowing historic data submission to credit bureaus. There was only one hitch point regarding capping of lender investment amount. However, I am sure that RBI will increase that cap in upcoming times," added co-founder and chief executive officer LenDenClub, Bhavin Patel.

On existing NBFC-P2Ps applying within three months from the issuance of these directions, Raghavendra highlighted that while incumbent P2P players are getting only three months to apply for a license, new players will get 12 months to set up the business.

On aggregate exposure of a lender to all borrowers at any point of time, across all P2Ps subjected to a cap of Rs 10,00,000 he opined that the same will restrict the growth of this sector as there are many HNIs who have invested more than 10 lakhs on our platform alone.

"NBFC- P2P not providing or arranging any credit enhancement or credit guarantee will restrict P2P players to create innovative products like principal protection to safeguard investor's money. NBFC- P2P maintaining a Leverage Ratio not exceeding will restrict players to take debt in future for expansion", he added.