The Reserve Bank of India (RBI) has written to the industry body of peer-to-peer (P2P) lending companies seeking details on how regulations have impacted the funding of creditworthy borrowers.
This comes in response to a representation made by Association of NBFC P2P Lending Platforms to RBI on July 31 to ease regulation around the P2P lending sector.
The development was first reported by The Economic Times.
The letter from RBI asked the association to “furnish quantitative data with respect to individual P2P platforms on instances of partial funding of borrowers, creditworthy borrowers registered but not granted loans as per demand etc. to support the claim of ‘demand’ outstripping ‘supply’.” A copy of the letter was reviewed by TechCircle.
The central bank had come up with P2P lending platform directions in October 2017 and updated it in February 2018, introducing a cap of Rs 10 lakh on each lender registered on the platform. Following this, the association had said that within 18 months of the regulations coming into effect, companies in the space were struggling with increased costs of compliance and the high cost of acquiring and servicing retail lenders. The letter also stated that since the demand on these platforms outstrips supply, the cap on lending limit had led to creditworthy individuals being refused loans.
“We will be responding to the RBI at a company level on the queries. Each company has data on unfulfilled loans which will be shared with the regulator,” said Rajiv M Ranjan, secretary of the association in response to queries sent by TechCircle.
He added that the 16-member association had also requested a meeting with the regulator to discuss the challenges in the sector.