Through this brief article, we aim to provide a gist of the registration and licensing requirements for an entity engaged in peer-to-peer lending in India in addition to the prudential and reporting requirements in such respect.
Applicable laws on Peer to Peer (P2P) lending: An entity seeking to undertake the conduct of peer-to-peer lending in India is required to obtain a Certificate of Registration from the Reserve Bank of India (“R.B.I.”) and comply the prudential and reporting requirements and other stipulations under the ‘Non-Banking Financial Company – Peer to Peer Lending Platform (Reserve Bank).
Applicable laws on Peer to Peer (P2P) lending: An entity seeking to undertake the conduct of peer-to-peer lending in India is required to obtain a Certificate of Registration from the Reserve Bank of India (“R.B.I.”) and comply the prudential and reporting requirements and other stipulations under the ‘Non-Banking Financial Company – Peer to Peer Lending Platform (Reserve Bank) Directions, 2017’.
REGISTRATION AND REGULATORYCOMPLIANCES BY A NBC-P2P
The ‘Non-Banking Financial Company – Peer to Peer Lending Platform (Reserve Bank) Directions, 2017′(“Directions”), issued by the Reserve Bank of India (“RBI”), provide for the regulation of the conduct of Peer-to-Peer Lending (“P2P Lending”) in India.
The Directions provide that no entity other than a company (as incorporated under Companies Act, 2013 or earlier company law) that has obtained a Certificate of Registration from the RBI (“CoR”) shall be permitted to carry on the business of a P2P Lending platform, with the Direction also prescribing eligibility criteria for obtaining the CoR such as determination of ‘fit and proper’ status, robustness of Information Technology system, adequacy of capital structure, public interest considerations etc. application in respect of the CoR is to be furnished to the Department of Non-Banking Regulation, Mumbai of the RBI with existing operators having to make such application within 3 (three months of the date of issuance of the Directions.
The Directions further detail prudential norms and reporting requirements that an NBC-P2P is to adhere to, as detailed in the following diagram:
An entity seeking to undertake the conduct of peer-to-peer lending in India is required to obtain a Certificate of Registration from the Reserve Bank of India (“R.B.I.”) and comply the prudential and reporting requirements and other stipulations under the ‘Non-Banking Financial Company – Peer to Peer Lending Platform (Reserve Bank) Directions, 2017.
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