RBI caps lending on P2P platforms at Rs 50 lakh to protect consumer interest; transactions through bank accounts, cash not allowed

The lender investing more than Rs 10 lakh across P2P platforms will produce a certificate to P2P platforms from a practising Chartered Accountant certifying minimum net-worth of Rs 50 lakh.

Press Trust of India December 24, 2019 09:55:50 IST
RBI caps lending on P2P platforms at Rs 50 lakh to protect consumer interest; transactions through bank accounts, cash not allowed
  • The lender investing more than Rs 10 lakh across P2P platforms will produce a certificate to P2P platforms from a practising Chartered Accountant certifying minimum net-worth of Rs 50 lakh

  • As per the guidelines, the transfer of funds under P2P lending happens through an escrow account mechanism, which is operated by a bank promoted trustee.

  • It requires at least two escrow accounts, one for funds received from lenders and pending disbursal, and the other for collections from borrowers, be maintained

Mumbai: To protect consumers' interest, the Reserve Bank of India (RBI) on Monday said that on a peer-to-peer lending (P2P) platform the permissible exposure of a lender to all borrowers should not exceed Rs 50 lakh at any given point of time.

"On a review, it has been decided that 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 50,00,000 provided that such investments of the lenders on P2P platforms are consistent with their net-worth," the RBI said in a notification.

The lender investing more than Rs 10 lakh across P2P platforms will produce a certificate to P2P platforms from a practising Chartered Accountant certifying minimum net-worth of Rs 50 lakh.

"Further, all the lenders shall submit a declaration to P2P platforms that they have understood all the risks associated with lending transactions and that P2P platform does not assure return of principal/payment of interest," the RBI said in a notification.

RBI caps lending on P2P platforms at Rs 50 lakh to protect consumer interest transactions through bank accounts cash not allowed

Representational image. Reuters.

On fund transfer mechanism, it said: "Escrow accounts to be operated by bank promoted trustee for transfer of funds need not be mandatorily maintained with the bank which has promoted the trustee".

As per the guidelines, the transfer of funds under P2P lending happens through an escrow account mechanism, which is operated by a bank promoted trustee.

It requires at least two escrow accounts, one for funds received from lenders and pending disbursal, and the other for collections from borrowers, be maintained.

It also mandates that all the transactions through bank accounts, and cash transaction are strictly prohibited.

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Union Budget 2021: Govt must redirect focus on resolving demand-side issue for economic recovery
India

Union Budget 2021: Govt must redirect focus on resolving demand-side issue for economic recovery

Sunil Kumar Sinha of India Ratings warned that even if the supply-side bottlenecks get restored on account of various RBI measures it may soon run into difficulties due to the lack of adequate demand

India's GDP within striking distance of attaining 'positive growth', says RBI
Business

India's GDP within striking distance of attaining 'positive growth', says RBI

In an article about the state of India's economy, the RBI said that e-commerce and digital technologies are likely to be bright spots in India's recovery, but pre-pandemic levels of output and employment are still a long way off

2020 in review: Digital payments policy initiatives in 2020 that could have a lasting impact
India

2020 in review: Digital payments policy initiatives in 2020 that could have a lasting impact

Overall, the RBI has shown a welcome range in its focus last year, from financial inclusion, promoting innovation to easing payments in the pandemic.