RBI Tightens Regulations on NBFC-P2P Lending Platforms

The Reserve Bank of India has introduced stricter regulations for Non-Banking Financial Company Peer-to-Peer Lending Platforms. These new guidelines aim to enhance transparency and compliance, prohibiting the promotion of P2P lending as an investment with assured returns and restricting the cross-selling of insurance products.

The Reserve Bank of India (RBI) on Friday announced tighter regulations for Non-Banking Financial Company Peer-to-Peer (NBFC-P2P) Lending Platforms. This move aims to improve transparency and compliance within the sector.

According to the revised master direction issued by the RBI, P2P platforms are now restricted from promoting peer-to-peer lending as an investment product with guaranteed returns or offering liquidity options. Additionally, these platforms are barred from cross-selling insurance products that function as credit enhancement or credit guarantees.

The RBI observed that some platforms were violating existing guidelines introduced in 2017, prompting the need for these stricter measures. The updated guidelines have been put into effect immediately to curb these malpractices and ensure a more transparent operational framework.

(With inputs from agencies.)