A government of India notification released on Wednesday stated, "The RBI on being satisfied that it is necessary to do so, in exercise of the powers conferred on it by the Reserve Bank of India Act 1934, (2 of 1934) with prior approval from the government, hereby specifies, a non-banking institution that carries on the business of a peer to peer lending platform to be a NBFC".
The notification is only a precursor to actual guidelines that the RBI is soon to release, as RBI's ED Sudarshan Sen had earlier said the regulator is waiting for a gazette notification from the government to place these peer-to-peer platforms under its ambit. It also added that P2P lending platform mean that they are in the business of providing loan facilitation, via online medium or otherwise.
Outlining three major benefits of this notification on the sector, Vaddadyi added that now the companies get a Cibil access, which means that the borrowers on the platform can not default.
"The notification proves that the RBI is the final regulatory authority for the P2P lenders which builds a lot of credibility for the young players in this space", said Shankar Vaddadi, founder of i-lend, a Hyderabad-based P2P startup. As part of the paper, RBI had proposed some checks and balances which include minimum capital requirement of Rs 2 crore for companies to operate as P2P platforms. "In addition, it will lead to democratic flow of money and credit in the economy, wherein the needy will get money at right interest rate and people who wish to get high returns will be able to lend more".