P2P Lending Platforms Turn To Finance Ministry Over Credit Limit

P2P Lending Platforms Turn To Finance Ministry Over Credit Limit

SUMMARY

Earlier the association had written to RBI highlighting their grievances

P2P platforms have demanded a relaxation of the guidelines for credit limits issued in 2018

The current limit for all peer-to-peer credit loans is INR 10 Lakh

Peer-to-peer (P2P) lending industry body has now turned to the Finance Minister Nirmala Sitharaman to air their grievances regarding the Reserve Bank of India (RBI) norms, which limit the lending to INR 10 Lakh per customer.

The platforms have been seeking relaxation in the guidelines ever since its implementation in 2018. In August this year, the Association of NBFC Peer-to-Peer Lending Platforms had also written to RBI to highlight their issue.

The platforms demand an immediate extension of the limit to INR 1 Cr for retail investors, and remove the INR 10 Lakh cap on P2P lending for regulated platforms.

Rajiv M Ranjan, the secretary of the association, wrote, “In the last 18 months since the guidelines were announced, the biggest challenge being faced by the nascent industry is the lender limit of Rs 10 lakh. This single issue is threatening the very existence of the industry.”

In a reply to the letter, RBI has sought details of instances in which the NBFCs platforms had to turn down potential customers due to the guidelines.

The Steering Committee Report On Fintech Startups

With the FM meeting, the P2P lending platforms want to highlight the government’s steering committee report of September 2019, which focuses on the development of the recently regulated P2P lending platform.

“Potential hindrance in terms of restrictions on overall and individual exposure limits may be reviewed and options like allowing Mudra Bank to directly fund or co-fund SMEs and MSMEs through P2P platforms may also be examined as an alternative credit delivery channel,” the steering committee report said.

It also recommends that the finance ministry develop a marketplace model for debt financing in India by reforming the present model of P2P lending platforms. “Platform-based lending models are different from the traditional lending models. They seek to overcome the information asymmetry problem not by taking lending decisions, but by helping consumers take their own lending decisions. Applying the lens of traditional lending to these models may stifle their growth.”

You have reached your limit of free stories
Become An Inc42 Plus Member

Become a Startup Insider in 2024 with Inc42 Plus. Join our exclusive community of 10,000+ founders, investors & operators and stay ahead in India’s startup & business economy.

2 YEAR PLAN
₹19999
₹7999
₹333/Month
Unlock 60% OFF
Cancel Anytime
1 YEAR PLAN
₹9999
₹4999
₹416/Month
Unlock 50% OFF
Cancel Anytime
Already A Member?
Discover Startups & Business Models

Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the hottest startup deals, supercharge your innovation projects, and stay updated with expert curation.

P2P Lending Platforms Turn To Finance Ministry Over Credit Limit-Inc42 Media
How-To’s on Starting & Scaling Up

Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn to validate ideas, acquire customers, secure funding, and navigate the journey to startup success.

P2P Lending Platforms Turn To Finance Ministry Over Credit Limit-Inc42 Media
Identify Trends & New Markets

Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence, understand market landscapes, and decode emerging trends to make informed decisions.

P2P Lending Platforms Turn To Finance Ministry Over Credit Limit-Inc42 Media
Track & Decode the Investment Landscape

Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful investors, and keep track of upcoming funds, accelerators, and more.

P2P Lending Platforms Turn To Finance Ministry Over Credit Limit-Inc42 Media
P2P Lending Platforms Turn To Finance Ministry Over Credit Limit-Inc42 Media
You’re in Good company