The document discusses guidelines published by the Reserve Bank of India (RBI) for regulating peer-to-peer (P2P) lending platforms. It provides definitions of key terms like peer-to-peer lending and how P2P platforms work. It notes that the RBI guidelines require P2P platforms to register as non-banking financial companies (NBFCs) and addresses common questions around the guidelines. It also discusses best practices for investors to reduce risks when participating in P2P lending.

1. P2P LANDING PLATFORM
(P2P-NBFC)
The Reserve Bank of India (RBI) on October 4, 2017 published guidelines to regulate Peer to Peer Lending platforms
www.xyz.com
Providing an online platform to bring lenders
and borrowers together to help mobilize
funds.

2. What is Peer to Peer Lending?
Peer to peer lending is the process of lending money
to individuals or businesses through online lending
platforms. Any individual investor or financial
institution can become a lender of peer to peer
lending and earn interest paid by the individual or
business who has borrowed money.
Peer to peer platform is taking the banking model and
revamping it entirely to create a favorable lending and
borrowing climate. Peer to peer platforms function
completely online, hence lenders can earn a higher
rate of interest on their investments and the
borrowers can get better rates.

3. Is peer to peer lending regulated by
RBI?
• The Reserve Bank of India (RBI) on October 4,
2017 published guidelines to regulate Peer to
Peer Lending platforms to protect the interest
of lenders and borrowers.
• P2P Lending platforms are required to gain
certification as NBFC-P2P to continue
operating as peer to peer lending platform.

4. Non-Banking Financial Company – Peer to Peer Lending Platform
Sr.No.1 What is the meaning of the word ‘person’ mentioned at para 4(1)(iv) of the NBFC-P2P Directions, 2017? Would it
also include banks/NBFCs?
Ans: For the purposes of para 4(iv) of the Directions, the term ’person’ shall include an individual, a body of individuals, a HUF, a
firm, a society or any artificial body, whether incorporated or not.
Sr.No. 2 Would electronic platforms serving as Direct Service Agents (DSA)/ Business Correspondents for banks and/
or NBFCs fall under the purview of the NBFC-P2P Directions?
Ans: Electronic Platforms that assist only banks, NBFCs and other regulated AIFIs to identify borrowers are not to be treated as
P2P platforms. However, in cases where, apart from banks or NBFCs or AIFIs, other retail lenders use the platform for lending, the
platform will have to register separately as an NBFC-P2P.
Sr.No. 3 How is leverage defined in case of NBFC-P2P lending platform?
Ans: Leverage ratio refers to outside liabilities on the balance sheet of an NBFC-P2P Platform that it can raise divided by its owned
funds. Customers’ funds lent/borrowed by using the platform is not reckoned as outside liability of the platform.
Sr.No. 4 What is the meaning of Investible Funds?
Ans: Investible funds refer to capital infused in the business and surplus generated out of business of NBFC-P2P. It does not
include funds of lenders and borrowers that flow through the escrow accounts. Customers’ funds lent/borrowed by using the
platform cannot be utilised by the platform.
Sr.No. 5: Do applicants of NBFC-P2P registration require to bring in NOF of Rs. 2 crore upfront at the time of making the
application?
Ans: The applicant should give the list of promoters and the source of funds for the minimum capital of Rs 2 crore. The capital
should be infused before issue of CoR. No change in promoters will be allowed in the interregnum.
Sr.No. 6: Will an existing NBFC be able to operate as an NBFC-P2P?
Ans: No.

5. How does Peer to Peer Lending work?
• An individual or business who is looking for a
loan goes to a P2P platforms to borrow
money. Once the borrower is approved and
listed, individual and institutional lenders can
lend money to that borrower.
• Once the borrower gets funded, he/she starts
to make repayments every month. These
repayments cover principal and interest which
the lenders receive.

6. Is peer to peer to lending safe?
Similar to other investment asset classes, Peer
to Peer lending also involves risk. The risk is
highly dependent on the P2P lending platform
and their credit policies which determine the
quality of the borrowers. However, the risk
can be minimized by following guidelines
suggested for regular lenders.

7. How to reduce risk in P2P lending?
• Here are the most effective methods to reduce
risk in peer to peer lending:
• Check for credit verification process
• Diversify your funds into many borrowers
• Do your own due-diligence
• Invest through platforms which assists in loan
recovery

8. Published on December 24, 2019
The Reserve Bank of India (RBI) has set a ₹50-
lakh cap on the aggregate exposure of a
lender to all borrowers across all Non-Banking
Financial Company – Peer to Peer (NBFC-P2P)
lending platforms at any point of time.
• https://www.thehindubusinessline.com/money-and-banking/rbi-
sets-rs-50-lakh-cap-for-lender-to-all-borrowers-across-all-nbfc-p2p-
lending-platforms/article30386441.ece

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10. ROI

11. 1 Personal Verification
We verify all personal details of the borrower including reference verification, residence verification.
2 Professional Verification
Our credit team also verifies the professional details of the borrower, including office reference check.
3 Physical Verification
Our field executives verify the professional and personal address of that borrower by doing surprise
visits.
4 Financial Detail Verification
Borrowers financial details are verified by doing a thorough check of salary proof and bank statement
analysis.
5 Credit History Verification
To ensure that no defaulter borrower pass through our credit check, we check for credit history of each
borrower using CIBIL Credit Bureau data.
Verification Process

12. Business through escrow account
Expected returns are based on historical numbers. P2P
investments are subjected to credit default risk. Actual returns
may vary from investor to investor based on the performance of
invested loans. LenDenClub does not guarantee any returns.

13. EXISTING PLATFORM
www.lendbox.com
ESTABLISHED IN 2015
Registered Investors :- 32,070
Amount Disbursed :-769 Mn
Registered Borrowers :- 4,23,801
Asked Last Month:- 1908 Mn
Average Returns:- 30.74%
www.lendenclub.com
ESTABLISHED IN 2015
REGISTERED LENDERS 35,787
NET RETURN Up to 17%
REGISTERED WITH RBI NBFC-P2P
www.faircent.com
ESTABLISHED IN 2013
Lander :- 60000+
Loan amount approved `136.52 Lacs (Weekly data)
Average interest rate 24.95%
And some of other companies working as NBFC P2P that’s not here.

14. THANK YOU
Prepared by :- ANIL SONI
(BCA, MCA)