P2P lending platform LenDenClub has received its NBFC-P2P certification from the Reserve Bank of India (RBI), the Economic Times said. The RBI issued those guidelines last October, to register and accredit P2P lending firms that resell loans from individuals who have money to invest.

Started in 2015, the Mumbai based company essentially connects lenders with spare money with borrowers. The platform facilitates these transactions through background checks using factors like CIBIL, and CRIF scores. On its website, the company writes that it uses a proprietary algorithm for credit scoring and risk assessment. “We verify more than 100 data points of the borrower to derive LenDenClub Credit Score. This score will be mentioned in the borrower profile detail,” it adds.

Borrowers can request loan amounts between Rs 25,000 (minimum) to Rs 5 lakh (maximum). The platform facilitates loans for a minimum duration of 3 months and in subsequent multiples of months of 6, 9,12,18, and 24 months with 24 months being the maximum tenure. In terms of interest rates, the company charges between 6.5% and 20.5%, the official website of the firm said.

LenDenClub now becomes the fifth lender to operate in the NFC-P2P space. Last week, Cashkumar became the fourth lender to operate in the NFC-P2P space, while the week before that saw BigWin becoming the third lender to get the license. In June, OMLP2P became the second P2P lender to get RBI’s nod for NBFC-P2P certification, while In May, Faircent became the first such platform to receive this certification from the central bank.

RBI regulations

According to the guidelines put out by the RBI last year, the P2P platforms will act as only as an online intermediary and not raise deposits. These platforms will only act as a facilitator between different parties, and cannot provide any credit enhancement or credit guarantee. The RBI also directs that these companies cannot cross-sell other any product except for loan specific insurance products, and are not permitted international flow of funds. Also, the P2P lending platforms are supposed to undertake due diligence on the participants including credit assessment and risk profiling of the borrowers and disclose the same to their prospective lenders. They will also have to take prior and explicit consent of participants to access their credit information. The guidelines add that, the platforms will have to provide assistance in disbursement and repayments of loan amount and render services for recovery of loans originated on the platform.