HomeMedia CenterRBI Introduces Caps On Peer-To-Peer Lending

RBI Introduces Caps On Peer-To-Peer Lending

The Reserve Bank of India capped borrowing and lending on a peer-to-peer platform by an individual at Rs 50,000 in its final guidelines after deciding to regulate such entities.

A single person cannot borrow or lend more than Rs 10 lakh in total across such lending platforms at any given time, according to master directions released today. A P2P lending firm will need to have a minimum net-owned fund base of Rs 2 crore.

Eighty percent of the guidelines are similar to rules for non-banking companies, Bhavin Patel, chief executive officer of the LenDenClub told BloombergQuint. “The only concern is capping individual’s investment limit at Rs 10 lakh but I am sure the RBI will increase the cap over a period of time.”

The guidelines came more than a year after the central floated a discussion paper and follows the last month’s decision to regulate P2P platforms on a par with non-bank companies. Any entity acting as an intermediary and providing loan services online or otherwise will be considered a P2P platform.

More than 30 such startups have come up in the last four years, including Faircent, i2ifunding, LendenClub and Billionloans.

Such platforms rely on analytics and algorithms to assess a borrower’s risk profile. LenDen Club’s Patel said the RBI granting rights to P2P businesses to provide all historical data to credit bureaus is a positive move.

Existing as well aspiring P2P lending firms will have to apply for a certificate of registration with the RBI, according to the guidelines. Existing companies will have to comply within three months.

If an application is rejected, the platform will have to wind down its operations. An in-principle approval to an aspiring applicant will last up to 12 months, following which the RBI will grant the final certificate of registration, the central bank said.

Fund transfers between participants on the P2P lending platform shall be through an escrow account, which will be operated by a trustee. At least two escrow accounts, one for funds received from lenders and pending disbursal, and the other for collections from borrowers, shall be maintained, according to the regulator.

The trustee shall mandatorily be promoted by the bank maintaining the escrow accounts, the RBI said. All fund transfers shall be through bank accounts and cash transactions are strictly prohibited, the RBI said.

  • P2P lending firms will not be allowed to permit any foreign fund flows through its platform.
  • P2P lending platforms will not allow any secured lending linked to its platform, the regulator said.
  • They can’t provide or arrange any credit enhancement or credit guarantee.
  • Such a company will also not hold on its own balance sheet funds received from lenders or borrowers, the RBI said.
  • It will not be allowed to cross-sell any other financial product, other than a loan-specific insurance plan.

Credit: Bloomberg Quint

LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping investors diversify their investments beyond traditional investment instruments ever since.



The Reserve Bank of India does not accept any responsibility for the correctness of any of the statements or representations made or opinions expressed by Innofin Solutions Private Limited, and does not provide any assurance for repayment of the loans lent through its platform.

LenDenClub is an Intermediary under the provisions of the Information Technology Act, 2000 and virtually connects lenders and borrowers through its electronic platform via the website and/or mobile app.

The lending transaction is purely between lenders and borrowers at their own discretion, and LenDenClub does not assure loan fulfilment and/or investment returns. Also, the information provided on the platform is verified or checked on the best efforts basis without guaranteeing any accuracy of the data/information verification. Any investment decision taken by a lender on the basis of this information is at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower, fully or partially. The risk is entirely on the lender. LenDenClub will not be responsible for the full or partial loss of the principal and/or interest of lenders’ investment amounts.


*P2P investment is subject to risks. And investment decisions taken by a lender on the basis of this information are at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower.

** Average value mentioned is the weighted average of returns received by investors

© 2023 LenDenClub by Innofin Solutions Private Limited | CIN: U74999MH2015PTC266499


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