InvestorQ : What are the RBI’s regulations on P2P lending?
Kalyani Sundaram made post

What are the RBI’s regulations on P2P lending?

Suresh Patil answered.
3 years ago

While P2P or peer-to-peer lending in India has been legal, its only recently that they have come under Reserve Bank of India’s (RBI) purview.

The RBI had to regulate the P2P market due to its growing popularity. In fact, over the past few years, major global economies such as the USA, the UK, Canada, France, Germany, and China have taken steps to regulate P2P or peer-to-peer lending so as to establish it as a mainstream financial service sector.

In India, the online P2P lending industry was officially recognised as a financial services segment to be regulated by the Reserve Bank of India (RBI) in October 2017. The central bank- RBI- devised a framework for all companies engaged in P2P lending. Under the framework, P2P lenders are categorised as NBFC-P2Ps and will have to, accordingly, follow the regulatory and requirements within the framework.

The central bank’s decision to regulate as well as recognise the P2P lending industry has provided a much-needed impetus to financial inclusion in the Indian economy. Although the technology behind P2P lending is still relatively new and is evolving, the RBI’s move to recognise it is a major positive.