The peer-to-peer lending startups, which was in dark in terms of regulations around it, has seen a new development with a notification from the government. The Reserve Bank of India (RBI) has identified such startups as a special category of non-banking finance companies (NBFCs) and will be regulated by the banking regulator.
The notification comes a week after Sudarshan Sen, executive director, RBI had said that the regulator was awaiting the gazette notification from the central government for the final guidelines to be released.
Now with the notification being out, the RBI will soon release the final guidelines on P2P lending and licence the entities under NBFC category, who are managing the platforms to enable such transactions.
Besides helping the startups engaged in this business raise organised funding, the announcement also recognises the fact that P2P lending platforms can play a vital role in bridging the financial needs of the economy.
“The notification proves that the RBI is the final regulatory authority for the P2P lenders which builds a lot of credibility for the young players in this space,” said Shankar Vaddadi, founder of i-lend, a Hyderabad-based P2P startup talking to ET. “This move would also help us access organised venture capital funding which is necessary for scaling up.”
Earlier, according to media reports, the RBI had floated a consultation paper in April 2016 on the Indian P2P lending that has been taking roots in India. It was expected to come out by June-July with guidelines to regulate the Indian peer-to-peer (P2P) lending market.
Peer-to-peer lending platforms are online technology-based players who connect lenders with borrowers. With their algorithms and decision making abilities they help lenders take a call on the creditworthiness of the borrowers and also enable quick disbursal of loans at reasonable interest rates.