Peer to Peer (P2P) Lending Business in India
- NBFC-Peer to Peer Lending License
- Company Registration with ROC with P-2-P Objects
- Preparing RBI Application for License
- IT and Data Security Policy Framework
- End to End Lisoning with RBI
- Grant of NBFC License
Peer to Peer (P2P) lending, also known as social lending/cloud lending is a method to finance debt which enables individuals to lend and borrow money without the involvement of an official financial institution as an intermediary. Basically, it eliminates the need of middlemen involved in the process but is time-consuming. In P2P lending, lenders are free to choose whom to lend and can diversify their options among different borrowers.
Eligibility Criteria for Peer to Peer Lending Registration
- Should be incorporated in India
- Has necessary technological,entrepreneurial and managerial resources
- Has adequate capital structure to carry the business
- Directors are fit and proper
- Has a plan submitted/implemented for efficient Information Technology System
- Submitted viable business plan
- Serve Public Interest by the grant of CoR
Every existing and prospective P2P needs to make an application for registration to the following Address ‘ the Department of Non-Banking Regulation, Mumbai of the Bank’, in the form specified by the Bank along with additional documents. Whereas existing P2P can apply for the peer to peer lending registration within three months from the date these documents were issued.
Scope Of Activities
- Act as an intermediary to the participants
- Cannot raise or/under the section 45l(bb) of the companies act 2013
- Can not lend on its own
- Can not provide/arrange credit enhancement/guarantee
- Can not facilitate/ permit any secured lending through its platform
- Can not hold on funds received on its balance sheet
- Can not sell any other financial product
- Can not permit any international flow of funds
- Ensure adherence to all applicable legal norms
Limitations
- Borrowers who do not have credit history are excluded.
- Exposure to defaults from lenders side.
- High level of financial sophistication is demanded.
- Invades personal privacy of borrowers.
- Returns lower than publicly traded index fund.
Platform for p2b lending is a kind of device which connects the participants to interact with each other.
The validity of the in-principle approval by RBI would be 12 months from the date of granting such approvals.
As per the directions, only bank transfers are allowed to transfer the funds.In other words,no cash transfers can take place.
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