No Credit Enhancement by P2P Lending Platforms

Apr 4, 2018

The first version of the RBI Regulations on Peer to Peer Lending platforms was announced in October 2017. In the regulations RBI has focused a lot on bringing transparency in the process of p2p lending. While transparency was the utmost focal point, the RBI did not miss the point to curb mis-selling of this innovative investment instrument. Over promising or mi-selling is observed very often in India while selling financial services product. To curb all these, RBI has very clearly asked P2P Lending platforms not to provide any guarantees or security on the investments under Section 6 (1) (iv).

As per the regulations, any registered P2P Lending platform shall –

  1. Not provide or arrange any credit enhancement or credit guarantee
  2. Not facilitate or permit any secured lending linked to its platform; i.e. only clean loans will be permitted

If you are a new investor in P2P Lending, make sure that your investment platform is following the above scope of activity guided by the RBI. Any peer to peer lending platform, which offers any of the above services, it is now allowed.

For detailed version of the RBI regulations Click Here.

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