Peer-to-peer lending startups reacted positively to the first draft of the Central bank’s guidelines for the sector, but will seek clarifications on requirements such as a direct lending process and leverage ratio.
They have until May 31 to file feedback.
Reserve Bank of India, which published a discussion paper on Thursday with guidelines for peer-to-peer lending companies, said that “to ensure that there is enough skin in the game at a later date, leverage ratio may be prescribed so that the platforms do not expand with indiscriminate leverage”.
Startups including i-lend, Faircent, LenDenClub and Micrograam want a clarification on this requirement.
“The question of leverage ratio doesn’t arise when you’re not lending on your balance sheet,” said VVSSB Shankar, founder of i-lend, who plans to discuss the matter with RBI officials on Wednesday.
According to LenDenClub, instead of a prescribed leverage ratio, a fund for lender protection could be set up.
“From the transaction amount, we have kept aside a certain amount that could act as a lender protection fund. One could consider keeping aside a capital of 0.2% which can be utilised by the lenders in case of a default,” said Bhavin Patel, cofounder of Len-DenClub.