Reserve Bank of India has said that all non-bank players engaged in the business of peer-to-peer (P2P) lending would be classified as Non-banking financial companies (NBFCs).
RBI said in a gazette notification, “For the purpose of this notification, the term ‘the business of a peer to peer lending platform’ shall mean the business of providing under a contract, the service of loan facilitation, via online medium or otherwise, to the participants who have entered into an arrangement with that platform to lend on it or to avail of loan facilitation services provided by it.”
A P2P lender is typically a fintech platform which helps lenders and prospective borrowers get in touch with each other. In India, three broad categories of fintech lenders operate – those who connect individual lenders to borrowers, those who help institutional lenders identify suitable borrowers for their products, and those who disburse loans off their own books.
The third category of lenders already qualify as NBFCs. Notification will apply to lenders belonging to the first category, industry players said.