{"id":17942,"date":"2020-10-15T14:22:35","date_gmt":"2020-10-15T08:52:35","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=17942"},"modified":"2024-07-24T11:49:57","modified_gmt":"2024-07-24T06:19:57","slug":"nbfc-peer-to-peer-lending-platform-compliance-and-registration","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/nbfc-peer-to-peer-lending-platform-compliance-and-registration\/","title":{"rendered":"NBFC-Peer to Peer Lending Platform \u2013 Compliance and Registration"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The NBFC-Peer to Peer lending platform is an NBFC which engaged in the business of loan facilitation through an online platform. Both borrowers and lenders can approach to their portal and avail the services. This type of NBFC is not permitted to deposit, accept, or lend on its own. It moderates the connection between borrowers and lenders.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <\/p>\n\n\n\n<p>Technically, <a href=\"https:\/\/corpbiz.io\/nbfc-registration\" title=\"NBFC Registration in India\"><strong>NBFC<\/strong><\/a>-P2P renders services of connecting the right borrower to the right lender via <a href=\"https:\/\/corpbiz.io\/due-diligence\" tile=\"EDD Service\"><strong>due diligence<\/strong><\/a> on an online portal. Apart from the aforesaid service, it also renders other ancillary services such as credit assessment services, loan recovery services, profile verification, and other associated services.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/step-by-step-nbfc-registration-procedure\/\"title=\"Process of NBFC Registration\">NBFC Registration: Step by Step Procedure<\/a><\/mark><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/nbfc-peer-to-peer-lending-platform-compliance-and-registration\/#Prominent_Roles_of_Financial_Services_in_the_Indian_Economy\" >Prominent Roles of Financial Services in the Indian Economy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/nbfc-peer-to-peer-lending-platform-compliance-and-registration\/#Registration_Prerequisites_for_NBFC-Peer_to_Peer_Lending_Platform\" >Registration Prerequisites for NBFC-Peer to Peer Lending Platform<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/nbfc-peer-to-peer-lending-platform-compliance-and-registration\/#Role_of_NBFC-Peer_to_Peer_Lending_Platform\" >Role of NBFC-Peer to Peer Lending Platform<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/nbfc-peer-to-peer-lending-platform-compliance-and-registration\/#Activities_that_are_Prohibited_for_NBFC-Peer_to_Peer_Lending_Platform\" >Activities that are Prohibited for NBFC-Peer to Peer Lending Platform<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/nbfc-peer-to-peer-lending-platform-compliance-and-registration\/#Constraints_Imposed_on_Transaction_via_NBFC-P2P_platform\" >Constraints Imposed on Transaction\nvia NBFC-P2P platform&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/nbfc-peer-to-peer-lending-platform-compliance-and-registration\/#Operational_Compliances_for_NBFC_P2P\" >Operational Compliances for NBFC\nP2P<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/nbfc-peer-to-peer-lending-platform-compliance-and-registration\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prominent_Roles_of_Financial_Services_in_the_Indian_Economy\"><\/span>Prominent Roles of Financial Services in the Indian Economy<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>With the latest technology at the disposal,\nfinancial services are going to play a prominent role in the Indian economy due\nto disintermediation and low overhead cost. Credit facilitation services and\nlending processes of the commercial banks are over the counter. Often times it\nconsumes a lot of time and cost to avail credit from commercial banks.&nbsp;<\/p>\n\n\n\n<p><strong><em>Prominent reasons for the growing opportunity of Peer to Peer NBFC in the ever-evolving Indian market:-<\/em><\/strong><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"583\" height=\"340\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-53.png\" alt=\"Financial Services in the Indian Economy\" class=\"wp-image-17943\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-53.png 583w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-53-300x175.png 300w\" sizes=\"(max-width: 583px) 100vw, 583px\" \/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Registration_Prerequisites_for_NBFC-Peer_to_Peer_Lending_Platform\"><\/span>Registration Prerequisites for NBFC-Peer to Peer Lending Platform<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>Company should be working under\nthe Companies Act, 2013.&nbsp;<\/li>\n\n\n\n<li>Company must have two crore\nrupees as a minimum net worth at their disposal.&nbsp;<\/li>\n\n\n\n<li>Company must have scalable and\nversatile IT infrastructure to ensure the growth in business.&nbsp;<\/li>\n\n\n\n<li>Company must have a certificate\nof Registration (CoR) from RBI to perform the activities regarding the Peer to\nPeer Lending<\/li>\n<\/ul>\n\n\n\n<p>Apart from the aforesaid prerequisites,\nreserve banks also look into other conditions of registration i.e. managerial,\ntechnological, entrepreneurial capabilities of the applicant to conduct such a\nbusiness.&nbsp;<\/p>\n\n\n\n<p>After an in-depth evaluation of the given prerequisites, RBI shall grant the approval to the applicant for setting up the <a href=\"https:\/\/corpbiz.io\/peer-to-peer-lending-license\" title=\"Peer to Peer Landing Process\"><strong>Peer to Peer lending licence<\/strong><\/a> for the said Platform within the time-frame of the 12 months.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Role_of_NBFC-Peer_to_Peer_Lending_Platform\"><\/span>Role of NBFC-Peer to Peer Lending Platform<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>Facilitating e-platform to the\nindividuals engaged with peer to peer lending.&nbsp;<\/li>\n\n\n\n<li>Conducting audit of the\nindividuals engaged with peer to peer lending.<\/li>\n\n\n\n<li>Undertaking risk profiling and\ncredit assessment of the borrowers and presenting the same to the relevant\nlenders.&nbsp;<\/li>\n\n\n\n<li>Obtaining permission from the\nparticipants to avail of their credit information.&nbsp;<\/li>\n\n\n\n<li>Documents of the credit\nagreement and other relevant documentation.&nbsp;<\/li>\n\n\n\n<li>Assisting individuals during\nthe repayment or disbursement of credit amount.&nbsp;<\/li>\n\n\n\n<li>Credit retrieval services for\nloans exist on the platform.&nbsp;<\/li>\n\n\n\n<li>Loan Recovery services for\nLoans originated on the Platform.<\/li>\n\n\n\n<li>Sparing and compiling all data\nregarding its activities and participants on hardware present in India.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Activities_that_are_Prohibited_for_NBFC-Peer_to_Peer_Lending_Platform\"><\/span>Activities that are Prohibited for NBFC-Peer to Peer Lending Platform<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>It is not eligible to accept a deposit\nin any situation whatsoever as per the guideline of the RBI Act or Companies\nAct.&nbsp;<\/li>\n\n\n\n<li>It cannot pursue the lending\nbusiness on its own.&nbsp;<\/li>\n\n\n\n<li>It is not eligible to perform\ntasks like credit enhancement or provide guarantee services.&nbsp;<\/li>\n\n\n\n<li>Its balance sheet should not\nenclose the amount related to repayment done by the borrower and loan disbursed\nfrom the lenders.&nbsp;<\/li>\n\n\n\n<li>Cash transaction doesn\u2019t come\nin the portfolio of P2P lender. The entire transactions should be conducted\nthrough the bank accounts only.&nbsp;<\/li>\n\n\n\n<li>Its services like secured\nlending are prohibited on its platform.<\/li>\n\n\n\n<li>Cross sale of products not\npermitted except for insurance products.&nbsp;<\/li>\n\n\n\n<li>International transaction is\nnot allowed.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Constraints_Imposed_on_Transaction_via_NBFC-P2P_platform\"><\/span>Constraints Imposed on Transaction\nvia NBFC-P2P platform&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Following are the norms that must be followed by NBFC-P2P as per the RBI\u2019 issued directives<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>Leverage ratio should be\nmaintained within the threshold range i.e. 2.<\/li>\n\n\n\n<li>The lending limit should remain\nunder the 50 lakh for all the borrowers.<\/li>\n\n\n\n<li>A certificate of net worth\nbecomes compulsory in case if the lender invests more than INR 10 lacs across\nall platforms.<\/li>\n\n\n\n<li>A borrowing limit has been\ncapped at INR 10 lakhs.&nbsp;<\/li>\n\n\n\n<li>Rs 50,000 are the limit set up\nby the authority for the single lender to single borrower in case of lending\nmoney across all platforms.&nbsp;<\/li>\n\n\n\n<li>The maturity period of the loan\nis limited to 36 months.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Operational_Compliances_for_NBFC_P2P\"><\/span>Operational Compliances for NBFC\nP2P<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The given section will explain the operational\ncompliances for the NBFC-P2P. Those are as follows:-<\/em><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Operational Framework\nand Policy&nbsp;<\/h3>\n\n\n\n<p><em><strong>An NBFC-P2P need to draft a board policy for the following criteria:-<\/strong><\/em><\/p>\n\n\n\n<ul>\n<li>Forming criteria of eligibility\nfor the borrowers and lenders,<\/li>\n\n\n\n<li>Figuring out the pricing of the\navailable services.&nbsp;<\/li>\n\n\n\n<li>Laying down the regulations for\nmatching lenders and borrowers is an unbiased manner,&nbsp;<\/li>\n\n\n\n<li>Securing the data from\nunauthorized access,&nbsp;<\/li>\n\n\n\n<li>Continuity plan for the\nbusiness in case of closure of the lending platform.&nbsp;<\/li>\n\n\n\n<li>Addressing complaints thereof,<\/li>\n\n\n\n<li>Laying down Fit and Proper\nCriteria for the directors.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">&nbsp;Information System\nand Maintenance&nbsp;<\/h3>\n\n\n\n<p>An NBFC-P2P requires the setup of a sound\ninfrastructure backed by the latest information technology. The system must be\nable to provide information and documents on demand to the lenders and\nborrowers. The setup must safeguard the rights and information of the participants.&nbsp;<\/p>\n\n\n\n<ul>\n<li>The framework of the Information Technology must adhere to conditions given by the Reserve Bank for NBFC Sector.&nbsp;<\/li>\n\n\n\n<li>An NBFC-P2P must secure the Board-approved policy related to the maintenance and security of the <em><strong>IT system<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Information_technology\"><em><strong>[1]<\/strong><\/em><\/a><\/sup>.&nbsp;<\/li>\n\n\n\n<li>A business continuity plan should be in place to serve the credits for fill tenures in case if the platform gets closed for any reason.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sharing Information with Credit Information Companies\n(CICs)<\/strong><strong><\/strong><\/h3>\n\n\n\n<p>An NBFC-P2P shall join the Credit Information Companies and share the info of the borrowers on its platform periodically, depending on the terms with CICs.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Disbursal of Loan through the Platforms<\/strong><strong><\/strong><\/h3>\n\n\n\n<p>All credit must process only when the lender renders its approval and the concerned parties signed the credit agreement.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Setting up an Independent Account for Collection and Loan\nDisbursements<\/strong><strong><\/strong><\/h3>\n\n\n\n<p>All transactions initiated from the P2P platforms need to be done via a separate bank account handled by a Bank promoted trustee. The funds accumulated from the lender and borrowers should be transferred via escrow account only.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>P2P lending business also recognized as Marketplace lending or crowdfunding, regulated or regulated, is present in numerous countries across the globe. In our country, P2P lending is in its initial phase and it is evolving at a steady pace due to the presence of technology. Feel free to connect with <a href=\"https:\/\/corpbiz.io\/\" title=\"Corpbiz Legal Advisor\"><strong>CorpBiz<\/strong><\/a> to grab more detail on the same.&nbsp;<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/exemptions-from-registration-as-nbfc-by-reserve-bank-of-india\/\">Synopsis on Exemptions from Registration as NBFC by Reserve Bank of India<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The NBFC-Peer to Peer lending platform is an NBFC which engaged in the business of loan facilitation through an online platform. Both borrowers and lenders can approach to their portal and avail the services. This type of NBFC is not permitted to deposit, accept, or lend on its own. It moderates the connection between borrowers [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":17970,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[91,1115],"tags":[1109],"acf":{"service_id":"8"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":5177,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/17942"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=17942"}],"version-history":[{"count":13,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/17942\/revisions"}],"predecessor-version":[{"id":65565,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/17942\/revisions\/65565"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/17970"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=17942"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=17942"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=17942"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}