On lending and borrowing guidelines by the RBI on the peer-to-peer network

Peer-2-Peer Network

P2P lending is a niche area which needs attention. Many start-ups in India are based on this network. The RBI is also trying to issue guidelines based on this. Some of the points that can be noted are-

1. Every lender or borrower will have an unique digital ID, seeded with Aadhar ID.
2. There would be no cash transactions, but transactions with trails via electronic means.
3. There would be a threshold level for which P2P will fetch returns.
4. P2P institutions will be registered under a company in NBFC. This allows RBI to audit the companies.
5. There will be a cap on the upper and lower limit of the transactions by the RBI.
6. No “Brick & Mortar” presence in India, but registered offices and institutions.
7. Quarterly Reports on loans and financial status to be submitted to the RBI.
8. Under the Company’s Act, RBI to audit the companies on Quarterly basis.
9. There would be a confidentiality of the customer data.
10. Loan recovery to follow norms for recovery practices with guidelines from the RBI.

Some of the thoughts of RBI can be found here and here.