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P2P platforms taking on the lender role led RBI to read the riot act

Economic Times · 10m

The Reserve Bank of India (RBI) has tightened regulations for peer-to-peer (P2P) lenders after it was discovered that many were violating guidelines by holding large amounts of money in escrow accounts. P2P lenders were supposed to act as platforms connecting lenders and borrowers, but some were taking on the role of lending institutions and keeping funds, which is not permitted. The RBI's new regulations prohibit credit enhancement, guaranteed returns, and selling insurance products. Last week, the central bank issued a revised circular to enforce these new guidelines.