wordpress blog stats
Connect with us

Hi, what are you looking for?

RBI increases scrutiny of peer-to-peer lending platforms: Report

RBI’s latest regulatory measures target P2P lending platforms, signaling tighter oversight in the fintech sector.

The Reserve Bank of India (RBI) is investigating compliance issues with peer-to-peer (P2P) lending platforms. This comes in light of reports that these platforms are underplaying risks by promising high returns to lenders and exhibiting flaws in their Know Your Customer (KYC) and loan distribution processes, according to MoneyControl on February 19.

P2P lending platforms connect borrowers and lenders directly without involving a bank or non-banking financial company (NBFC) to provide the loan. These entities require a NBFC-P2P license from RBI.

According to a Reuters report from last December, the central bank conducted inspections of at least ten P2P platforms between June and September last year and instructed some of them to halt certain activities after the inspections found rule violations. And now, it has reached out to those platforms that haven’t implemented changes prescribed earlier, a founder of a P2P platform told MoneyControl. RBI last week asked these entities to submit information about their onboarding process, customer profiles, agreements with lenders, tax returns, etc. and gave them a 24-hour deadline to respond, MoneyControl reported. P2P platforms have also eased on working with new partners in light of the regulatory scrutiny of the sector, The Economic Times reported last week.

This is not the first time the central bank is closely monitoring the online lending space. Last year, RBI’s surprise ban on 94 lending apps left the fintech lending ecosystem worried. The year before that, RBI’s norms on credit lines through prepaid payment instruments (PPIs) disrupted the wallets and prepaid card ecosystem. More recently, RBI last month clamped down on popular fintech company Paytm Payments Bank for non-compliance with various guidelines. In December, it announced that it is working on a comprehensive regulatory framework for web aggregators of loan products (WALP). The central bank in 2022 also issued digital lending guidelines for fintech operating in this sector. All these points towards increased scrutiny on fintech companies in the lending space and are in line with what RBI Deputy Governor Rabi Shankar last July: “Conceptually, a fintech entity providing characteristic banking services such as loans and payments is pretty much doing a banking activity. Such entities may not require a banking license, but they need to be regulated similarly to how such activities are regulated in a bank.”

However, despite these developments, the one area where the central bank is not able to address concerns effectively is the predatory loan apps space. While the RBI has said that it has prepared a list of official lending apps and shared it with the IT Ministry in an attempt to thwart fake apps, the details of this list are not public and predatory loan apps continue populating the Google Play Store and Apple App Store.

Also Read

 


STAY ON TOP OF TECH NEWS: Our daily newsletter with the top story of the day from MediaNama, delivered to your inbox before 9 AM. Click here to sign up today!


 

Written By

Free Reads

News

The ‘Reforming Intelligence and Securing America Act’ (RISAA) is a legislation to reauthorize Section 702 of the Foreign Intelligence Surveillance Act (FISA).

News

In its submission, the Interior Ministry said the decision to impose a ban was "made in the interest of upholding national security, maintaining public...

News

Among other things, the security requirements include data encryption and regular review and updated access permissions to reflect personnel changes.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

Views

News

NPCI CEO Dilip Asbe recently said that what is not written in regulations is a no-go for fintech entities. But following this advice could...

News

Notably, Indus Appstore will allow app developers to use third-party billing systems for in-app billing without having to pay any commission to Indus, a...

News

The existing commission-based model, which companies like Uber and Ola have used for a long time and still stick to, has received criticism from...

News

Factors like Indus not charging developers any commission for in-app payments and antitrust orders issued by India's competition regulator against Google could contribute to...

News

Is open-sourcing of AI, and the use cases that come with it, a good starting point to discuss the responsibility and liability of AI?...

You May Also Like

News

Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...

Advert

135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...

News

By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

News

Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Name:*
Your email address:*
*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ