RBI hikes aggregate lending limit to Rs 50 lakh for P2P lenders

With a view to expand peer to peer (P2P) lending platform business, the Reserve Bank on Thursday raised aggregate lending limit by five times to Rs 50 lakh for such lenders.

At present, the aggregate limits for both borrowers and lenders across all P2P platforms stand at Rs 10 lakh, whereas exposure of a single lender to a single borrower is capped at Rs 50,000 across all NBFC-P2P platforms.

"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 RBI said in its statement on developmental and regulatory policies.

Further, it has also proposed to do away with the current requirement of escrow accounts to be operated by bank promoted trustee for transfer of funds having to be necessarily opened with the concerned bank.

This will help provide more flexibility in operations and necessary instructions in this regard will be issued shortly, it said.

Commenting on announcement, NBFC-P2P platform Finzy head of product Apoorv Gawde said the decision will help expand the industry and increase the confidence of investors in the asset class.

"It will help building scale in two major forms - existing investors who have experienced the power of P2P will now get an opportunity to increase their participation and a new segment of HNI investors will also begin to see the value of this asset class thanks to the increased limits," he said.

The statement further said a number of commercial banks, urban cooperative banks and other regulated entities are dependent upon third party application service providers for shared services for ATM Switch applications.

Since these service providers also have exposure to the payment system landscape and are, therefore, exposed to the associated cyber threats, it has been decided that certain baseline cyber security controls will be mandated by the regulated entities in their contractual agreements with these service providers, it said.

"The guidelines would require implementation of several measures to strengthen the process of deployment and changes in application softwares in the ecosystem; continuous surveillance; implementation of controls on storage, processing and transmission of sensitive data; building capacity for forensic examination; and making the incident response mechanism more robust," it said.

Detailed guidelines in this regard will be issued by month-end, it added.

As recommended by the Task Force on Development of Secondary Market for Corporate Loans, the RBI will facilitate the setting up of a self-regulatory body (SRB) as a first step towards the development of the secondary market for corporate loans.

The SRB will be responsible for standardising documents, covenants and practices related to secondary market transactions in corporate loans and promoting the growth of the secondary market in line with regulatory objectives, it said.