Overview Peer to Peer Lending License
The term P2P (Peer to Peer) basically denotes an online platform or portal that works as an intermediary between the lenders and borrowers. To start a P2P Lending Business in India, one needs to acquire a Peer to Peer Lending License from the Reserve Bank of India. Further, the borrower of a Peer to Peer (P2P) can be both a lawful business entity and an individual.
Nowadays, entrepreneurs and start-ups tend to choose Peer to Peer Lending for the growth in their initial days, as it assists them in growing them that, too, without obtaining money from any person. Therefore, it has become one of the most comfortable and primary choice for everyone who are looking for the venture funding.
Concept of Peer to Peer Lending
The concept of Peer to Peer Lending means a process of lending out an amount of money to the people or business houses by way of online services, which assist match between the lenders and borrowers. Also, the process of P2P lending is mostly carried out online.
Further, Peer to Peer Lending is a mode of debt financing which permits the individuals to lend & borrow money without the actual participation and involvement of a financial institution as an intermediary. That means the process of Peer to Peer Lending removes the intermediary from the lending and both the borrower and the lender save on the charges that are charged by the intermediary. The only authority to issue a Peer to Peer Lending License is with the Reserve Bank of India.
Benefits of Peer to Peer Lending License
The benefits of Peer to Peer Lending License are as follows:
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Basic Characteristics of Peer to Peer Lending License
The basic characteristics of P2P Digital Lending Platforms are as follows:
Operations of Peer to Peer Digital Lending Platform
The operation of a Peer to Peer Digital Lending Platform can be summarised as:
Eligibility Criteria to Start Peer to Peer Digital Lending Platform in India
The Eligibility Criteria to obtain Peer to Peer Lending License in India can be summarised as:
Conditions to Start Peer to Peer Digital Lending Platform in India
The basic conditions to start Peer to Peer Lending Digital Platform in India can be summarised as follows:
Permitted Activities of Peer to Peer Digital Lending Platform in India
The activities permitted by the Peer to Peer Digital Lending Platforms in India are as follows:
Responsibilities of Peer to Peer Digital Lending Platform in India
The responsibilities of the Peer to Peer Digital Lending Platforms in India are as follows:
Fund Transfer Mechanism for Peer to Peer Digital Lending Platform in India
The funds transfer mechanism for obtaining peer to peer lending license in India can be summarised as:
Procedure for obtaining Peer to Peer Lending License
The steps involved in the process for obtaining Peer to Peer Lending License in India can be summarised as:
Difference Between Crowdfunding and Peer to Peer Lending
In India, the concept of Peer to Peer digital lending is a type of crowd-funding, under which the loans are raised & paid back with a fixed interest. Further, Peer to Peer Lending Platform works as an online platform on which the lenders & borrowers register themselves in order to raise the unsecured loans. Further, under this mechanism, the borrower will either be an individual or a legal business entity.
Frequently Asked Questions
P2P lending platform is a type of lending platform which connects borrower and lender with each other. Peer to Peer lending has become a primary and comfortable choice of most of the start-ups and entrepreneurs during the initial days of their business when they are looking for venture funding. On this stage, business people can without much of a stretch obtain money from people.
The safety of P2P lending depends upon the factor like lending money to the low risk borrowers after proper verification.
The in principal approval given by RBI would be valid for 12 months from the date approval is granted.
- Amount of loan is quite low in comparison to banks
- Often you experience more borrowers and less lenders
- Less Security
- Regardless of whether the credit rating assessment done by the stage is dependable or not, is a worry. In this way the hazard related isn't sure.
- With the P2P business still in its incipient stage, it would be too soon to arrive at a complete resolution.
- Returns are lower in contrast with traded on an open market list finance
- Company must be registered in India
- It is essential for applicant to have technological, entrepreneurial and managerial resources
- So as to complete P2P lending platform, a candidate must have satisfactory capital structure;
- Proposed Directors must satisfy the fit and legitimate models
- There must be a legitimate arrangement for proficient Information Technology System
- A feasible Business Plan
- Thought process to serve in public interest
- Organization ought to be registered in India as Private Limited Company or Public Limited Company with the principal motive of financing;
- Least net possessed assets of INR 2 crores.
- WebSite/Mobile App Work Flow
- The online application is accessible on RBI's site (COSMOS).
- Accommodation of printed copy of the application alongside joined necessary papers will be submitted to RBI Office.
- The permit will be allowed simply after watchful review of the application and necessary papers connected with it.
P2P lending can be similarly as protected as some other investment. No investment is ensured to give you benefit each and every year. The chances of gaining a benefit with P2P loaning are a lot higher when you put resources into borrowers with great credit.
In India, peer-to-peer lending is as of now managed by the Reserve Bank of India, India's Central Bank. It has distributed a discussion paper on guideline of P2P loaning and the final guidelines were discharged in 2017. There were more than 30 peer-to-peer lending platforms in India in 2016.
It is workable for instance to loan money for benefit through different social lending sites. For this situation, you don't generally need to think a lot about how to advance cash.