The Reserve Bank of India (RBI) did not hold specific meetings internally or consult with any non-banking finance companies- peer-to-peer (NBFC-P2P) lending platforms before issuing the August 16 circular that led to a sharp fall in P2P industry’s overall assets, according to a Right to Information (RTI) application response given by the regulator. businesslinehas seen a copy of the RTI query and the reply.
“It is informed that no such specific meetings (of RBI officials) were held to finalise the circular (August 16 circular)…Further, no consultations were held with participants of the NBFC-P2Ps, and hence the Bank does not have any information to provide…,” the RBI said in a RTI response.
The regulator added that the circular was issued to ‘elaborate and clarify’ certain existing provisions, with some modifications, for proper implementation of the regulations applicable to NBFC-P2P. The RBI did not respond to queries sent by businessline till press time.
Industry impact
According to officials of large P2P companies, the RBI usually holds consultative talks with industry participants before issuing any circular which could lead to significant business disruptions at financial entities.
Large P2P players have seen sharp fall in lending volumes, with industry asset under management (AUM) shrinking by 65 per cent post the August 2024 diktat, industry players say.
According to sources, P2P major LiquiLoans has stopped onboarding new customers on its platform post August 16, while another large exchange Faircent is onboarding new customers at a very slow pace due to strict compliance standards. Meanwhile, one large exchange is now seen shifting their core focus to fractional ownership of interest earning assets.
The regulator had in August barred P2P players from offering tenure-linked assured minimum returns and liquidity options, apart from mandating T+1 settlement cycle. These measures, especially implementing the T+1 settlement cycle and lack of secondary market, led large P2P players to halt onboarding new customers.
Further, on Friday, the regulator imposed a series of monetary penalties totalling nearly ₹77 lakh on four P2P lending platforms, including Faircent, Finzy, Visionary Financepeer and Rang De for disbursing loans without the specific approval of individual lenders.
