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:

also read

Head-on | India must develop its own methodology to rank global institutions
India

Head-on | India must develop its own methodology to rank global institutions

It is time India stopped being beholden to how others see us and start telling others how we see them

Inflation expected to remain higher than RBI tolerance level till Dec, says Shaktikanta Das
Business

Inflation expected to remain higher than RBI tolerance level till Dec, says Shaktikanta Das

The RBI governor said inflation is currently the biggest challenge confronting most economies in the world and the current surge is primarily because of global factors

RBI Recruitment 2022: Admit card out for Fire Officer posts at opportunities.rbi.org.in; direct link here
Education

RBI Recruitment 2022: Admit card out for Fire Officer posts at opportunities.rbi.org.in; direct link here

The RBI recruitment exam is scheduled to be conducted as an online test on Saturday, 9 July. The paper will consist of 100 questions and will have a maximum of 200 marks.