RBI clarifies that ‘business of peer to peer lending (P2P loan) would be treated as Non-Banking Financial Company (‘NBFCs’). Hence, it is clarified from the notification that P2P loan will come under the ambit of RBI.
Department of Non-Banking Regulation further defines the business of a peer to peer lending platform as “the business of providing under a contract, the service of loan facilitation, via online medium or otherwise, to the participants who have entered into an arrangement with that platform to lend on it or to avail of loan facilitation services provided by it.”
This notification is one more step towards ease of doing business in India as it will help business engaged in the P2P loan to gain official recognition whereby opening one more avenue for fundraising and business expansion.
According to RBI, P2P lending is a form of crowdfunding used to raise loans which are paid back with interest.
It can be defined as the use of an online platform that matches lenders with borrowers in order to provide unsecured loans.