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P2P NBFC Registration | P2P Lending Company Incorporation Consultancy

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NBFC P2P Lending Registration

P2P Lending stands for Peer-to-Peer lending. The term “Peer to Peer Lending Platform” means an intermediary providing the services of loan facilitation via online medium or otherwise, to the participants. Participant means a person who has entered into an arrangement with an NBFC-P2P to lend on it or to avail of loan facilitation services provided by it. NBFC P2P Platform is a Non-Banking Financial Company providing services of loan facilitation to interested individuals or businesses through online portals. An individual or financial institution can become a lender at P2P lending and earn interest paid by the individual or business who has borrowed money. P2P Lending operates completely online and serves to connect such lenders and borrowers. An individual who is interested to invest his money somewhere else lends the same (lender) to the individual who is in need of money(borrower) through P2P Lending Platform.


Emergence Of Peer To Peer Lending:

A result of the greater shift towards digitalization of transactions is, the peer-to-peer lending sector has started growing in India. This sector has been brought under the regulatory framework of the Reserve Bank of India (“RBI”) under the wing of NBFCs. The digitally backed NBFCs are assessing the borrowers’ creditworthiness online and delivering almost instant credit with little or no paperwork, transparency in their offerings and great customer service which is a significant upgrade from the earlier experience.


Eligibility Criteria For Becoming An NBFC P2P:

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Documents Required for NBFC P2P Lending Registration

  • iconthe details of the software/ hardware proposed to be set up by the applicant
  • iconRoad map giving the timeline by which the IT infrastructure can be set up.
  • iconBrief of the business model to be adopted
  • iconProposed process for participant authentication
  • iconThe procedure to be adopted for documentation of loan agreements.

Scale Based Regulation(Sbr); A Revised Regulatory Framework For NBFCs:

To tighten strict control over NBFCs, RBI has prescribed Guidelines on Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs on 22nd October 2021 which will be effective from 01st October,2022. NBFCs shall be categorized into Four Layer Approach i.e Base Layer, Middle Layer, Upper Layer and Top Layer. NBFC-Peer to Peer Lending Platform (NBFC-P2P) shall be covered under the “Base Layer” Category. RBI has also brought changes in regulatory Net Owned Fund for NBFC-ICC, NBFC-MFI and NBFC-Factors which shall be increased to Rs 10 Crores. But for NBFC-P2P, NBFC-AA, and NBFCs with no public funds and no customer interface, the NOF shall continue to be ₹2 crore.


Procedure of NBFC P2P Lending Registration:

Sr. No.

PARTICULARS

PROCEDURE

1.      

APPLICATION

An application is required to be made by the Company for registration as NBFC P2P to the Department of Regulation, Mumbai of the Reserve Bank of India in the form as may be specified.

2.

CONDITIONS TO BE FULFILLED FOR THE PURPOSE OF CONSIDERING APPLICATION FOR REGISTRATION

a. The Company must be incorporated in India;

b. The Company must have necessary technological, entrepreneurial and managerial resources for offering services to the users of Peer-to-Peer Lending Platform;

c. The company must have adequate capital structure to carry on the business of Peer-to-Peer Lending Platform;

d. The Promoters and the Directors of the company are fit and proper;

e. General character of the management of the Company must not be prejudicial to the public interest;

f. The Company must submit a plan or implement a robust and secure Information Technology system;

g. The Company must submit a viable business plan for undertaking the business of Peer-to-Peer Lending Platform;

h. Public Interest must be served by the grant of Certificate of Registration;

i. Such other conditions as may be specified by the Bank

3.

IN PRINCIPLE APPROVAL:

i. After fulfillment of the following conditions, Bank may grant in-principal approval for setting up of a Peer-to-Peer Lending Platform, subject to such conditions which it may consider fit to impose.

ii. The validity of the in-principal approval shall be 12 months from the date of granting such in-principal approval.

iii. The company shall put in place the technology platform, enter into all other legal documentations required and report position of compliance with the terms of grant of in-principal approval to the Bank within the period of twelve months.

iv. The Bank, after being satisfied that the entity is ready to commence operations, grant a Certificate of Registration as NBFC-P2P, subject to such conditions as it may deem fit by the Bank.

Reasons Of Growing Opportunity Of P2P NBFC In Flourishing Indian Market:

  • iconMake Loan procedure easy
  • iconLower Cost of Borrowing
  • iconEasy Funding to Micro and Small Sized Enterprises
  • iconLess Paperwork
  • iconDirect Negotiation between Lender and Borrower

Reporting Requirements:

  • iconThe Bank may, from time to time, prescribe return/s to be submitted by NBFC-P2P, as it deems fit.
  • iconThe following quarterly statements shall be submitted to the aforesaid Regional Office within 15 days after the quarter to which these relate.
  • iconA statement, showing the number and amount in respect of loans;
  • icondisbursed during the quarter;
  • iconclosed during the quarter; and
  • iconoutstanding at the beginning and at the end of the quarter, including the number of lenders and borrowers outstanding as at the end of the quarter
  • iconThe amount of funds held in the Escrow Account, bifurcated into funds received from lenders and funds received from borrowers, with credit and debit summations for the quarter.
  • iconNumber of complaints outstanding at beginning and at end of quarter, and disposed of during the quarter, bifurcated as received from
  • iconlenders and
  • iconborrowers.
  • iconThe Leverage Ratio, with details of its numerator and denominator.

Cancellation Of Certificate Of Registration:

The Bank may cancel the CoR granted to an NBFC-P2P, if such company –


  • iconceases to carry on the business of Peer-to-Peer Lending Platform in India; or
  • iconhas failed to comply with any condition subject to which the CoR has been issued to it; or
  • iconis no longer eligible to hold the CoR; or
  • iconat any time fails to fulfill any of the conditions referred to in paragraphs 5(2)(ii) and 5(2)(v); or
  • iconfails to –
  • iconcomply with any Direction issued by the Bank; or
  • iconmaintain accounts, publish and disclose its financial position in accordance with the requirements of any law or any Direction or order issued by the Bank; or
  • iconsubmit or offer for inspection its books of account or other relevant documents when so demanded by the Bank.