P2P startups to get backed by NBFCs soon

Here’s some good news for P2P startups...

After a recent notification by the Central Government, the Reserve Bank of India(RBI) said that the central bank has identified peer-to-peer lending(P2P) startups as a special category of non-banking finance companies(NBFCs). This will be regulated by the bank regulator.

The notification provides a ground for the release of final guidelines from the RBI on P2P lending. This includes licensing the entities who manage such transactions also.

“The notification proves that the RBI is the final regulatory authority for the P2P lenders which builds a lot of credibility for the young players in this space”, said Shankar Vaddadi, founder of i-lend, a Hyderabad based P2P startup.

Executive director, RBI, Sudarshan Sen had commented earlier that the regulator was awaiting the gazette notification from the central government for the guidelines to be released. Now, with the new notification, RBI could release regulations anytime. Additionally, helping the startups engaged in the business can raise organised funding. 

“It will help achieve the government’s dream of facilitating financial inclusion through greater credit access for small and micro enterprises, which till now were either denied access or were under-served by the traditional financial institutions”, said Rajat Gandhi, co-founder of Faircent, a Delhi-based peer-to-peer player.

P2P platforms are online based technology players who connect lenders and borrowers. They help lenders to take a decision on the credit worthiness of borrowers. This also enables quick disbursal of loans at reasonable interest rates.

With the central government backing the P2P startups, do you think this move would prove beneficial for startups in India?

Please share your views.

Source: The Economic Times