**Summary:**
This document, issued by the Reserve Bank of India (RBI) on December 23, 2019, announces revisions to the Master Directions - Non-Banking Financial Company - Peer to Peer Lending Platform (NBFC-P2P) Reserve Bank Directions, 2017, specifically paragraphs 7 and 9.
The key changes are:
* **Lender Exposure Cap:** The aggregate exposure of a lender to all borrowers across all P2P platforms is capped at ₹50,00,000, provided these investments are consistent with the lender's net worth.
* **Net Worth Certification:** Lenders investing more than ₹10,00,000 across P2P platforms must provide a certificate from a practicing Chartered Accountant verifying a minimum net worth of ₹50,00,000.
* **Risk Declaration:** All lenders must submit a declaration to P2P platforms acknowledging their understanding of the risks associated with lending transactions and confirming that the P2P platform does not guarantee the return of principal or payment of interest.
* **Escrow Account Flexibility:** Escrow accounts operated by bank-promoted trustees for fund transfers are no longer required to be mandatorily maintained with the bank that promoted the trustee.
The updated Master Directions - Non-Banking Financial Company - Peer to Peer Lending Platform Reserve Bank Directions, 2017, reflect these changes.
For further information, contact Chandan Kumar, General Manager, Department of Regulation, Central Office, 2nd Floor, Centre I, World Trade Centre, Cuffe Parade, Colaba, Mumbai – 400005, India. Phone: 91 22 22182526. Fax: 91 22 22162768. Email: cgmdnbrcorbi.org.in. The RBI's website is www.rbi.org.in. The reference number for this circular is DOR.NBFCPD.CC.No.10603/03.10.124/2019-20.
Key Entities Referenced
Reserve Bank of India: The central bank of India, the primary regulatory body.
Non-Banking Financial Company Peer to Peer Lending Platform: A type of financial institution that facilitates peer-to-peer lending.
Master Directions Non-Banking Financial Company Peer to Peer Lending Platform Reserve Bank Directions, 2017: A set of guidelines issued by the Reserve Bank of India for regulating P2P lending platforms.
Chartered Accountant: A professional accountant who is certified to provide financial advice and audit services.
Mumbai, Maharashtra: A city in Maharashtra, India, where the Central Office of the Department of Regulation of the Reserve Bank of India is located.
Chandan Kumar: General Manager at Reserve Bank of India.
Escrow accounts: Account used for transfer of funds need not be mandatorily maintained with the bank which has promoted the trustee.
Department of Regulation, Central Office: A department and office within the Reserve Bank of India.
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RESERVE BANK OF INDIA
www.rbi.org.in
RBI/2019-20/121
DOR.NBFC(PD) CC.No.106/03.10.124/2019-20 December 23, 2019
All Non-Banking Financial Company – Peer to Peer Lending Platforms
Madam/Sir,
Review of Master Directions - Non-Banking Financial Company – Peer to Peer Lending
Platform (Reserve Bank) Directions, 2017
Please refer to paragraphs 7 and 9 of Master Directions - Non-Banking Financial Company –
Peer to Peer Lending Platform (Reserve Bank) Directions, 2017, dated October 04, 2017.
2. On a review, it has been decided that
(i) The aggregate exposure of a lender to all borrowers at any point of time, across all P2P
platforms, shall be subject to a cap of ₹50,00,000 provided that such investments of the
lenders on P2P platforms are consistent with their net-worth.
The lender investing more than ₹10,00,000 across P2P platforms shall produce a certificate
to P2P platforms from a practicing Chartered Accountant certifying minimum net-worth of
₹50,00,000. Further, all the lenders shall submit declaration to P2P platforms that they have
understood all the risks associated with lending transactions and that P2P platform does not
assure return of principal/payment of interest.
(ii) Escrow accounts to be operated by bank promoted trustee for transfer of funds need not
be mandatorily maintained with the bank which has promoted the trustee.
3. Master Directions - Non-Banking Financial Company – Peer to Peer Lending Platform
(Reserve Bank) Directions, 2017, have accordingly been updated.
Yours faithfully,
(Chandan Kumar)
General Manager
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फोन: (+91-22) 22182526 फैक्स:(91-22) 22162768, Email: cgmdnbrco@rbi.org.in
Department of Regulation, Central Office, 2nd Floor, Centre-I, World Trade Centre, Cuffe Parade, Colaba, Mumbai – 400005, India
Tel.: (+91-22) 22182526 Fax: (91-22) 22162768, Email: cgmdnbrco@rbi.org.in
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