The Association of NBFC P2P Platforms, an industry body of peer-to-peer (P2P) lending companies, has written to the Reserve Bank of India (RBI) to relax norms for growth of the sector.
In the letter submitted to the RBI, the association of 16 RBI-licenced P2P institutions has asked for increasing individual limits for lending for high net worth individuals (HNIs) and ultra HNIs to Rs 1 crore. The submission also asked the central bank to do away with lending limits on regulated institutions like banks and non banking finance companies (NBFCs).
The central bank had come up with peer to peer lending platform directions in October 2017, which was updated in February 2018 to include a cap on lender limit of Rs 10 lakh.
The submission also states that the unfair advantage given to online wallets and fintech companies, which do not have to comply with a cap on lending, has also led to increased investments in these companies.
“Today, VCs are wary of investing in P2P platforms in India primarily because of Rs 10 lacs limit per lender. In contrast, other similar platforms, which are originating loans and getting these funded through NBFCs and banks, are operating without the P2P CoR or any other regulatory oversight and hence, have no such obligations,” reads an excerpt from the letter reviewed by TechCircle. The development was first reported by The Economic Times.
The letter also states that in the last 18 months since the regulations for the P2P industry came into effect, companies have been struggling on various counts due to the cap on lending. Among other reasons, it cites the inability to service borrowers as demand outstrips supply, high cost of acquiring and servicing retail lenders and a direct hit on the profitability of P2P lending companies due to the high costs of compliance.
P2P industry players are required to publicly disclose the credit assessment or methodology being used by the platform, disclosures on the usage of data collected by the platform as well as portfolio performance including share of non-performing assets on a monthly basis, according to the RBI directions.
Recently, online P2P lending platform Faircent raised an undisclosed amount from Das Capital and Gunosy Capital.