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RBI to regulate peer to peer lending firms
The Reserve Bank of India (RBI) will be regulating all peer-to- peer (P2P) platforms according to a government of India notification.

According to RBI, P2P lending is a form of crowd funding used to raise loans which are paid back with interest. It can be defined as the use of an online platform that matches lenders with borrowers in order to provide unsecured loans.

As per the notification, all the P2P loan platforms will be treated as non-banking financial companies (NBFCs) and therefore will be within the ambit of the RBI. It is most likely that the RBI will be releasing a list of regulations for regulating the P2P lending in the country.

RBI had floated a consultation paper in this connection in April 2016. This paper stated that the “potential benefits of P2P lending promises the stakeholders (borrowers, lenders, agencies etc)and its associated risks to the financial system are too important to be ignored. The regulator had argued in favour of regulating P2P lending entities in the consultation paper, stating that the sector has the potential to “disrupt the financial sector and throw up surprises”.

The notification will help P2P lenders gain official recognition, opening new avenues for fund-raising and business expansion.
Posted on: 2017-09-26 11:32:34





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