RBI: RBI raises aggregate exposure limit to Rs 50 lakh on P2P lending platforms – The Economic Times

P2P platforms have for long been asking for a revision of the lending cap, calling it a hindrance to their growth since it kept HNI lenders away from the platforms.

The Reserve Bank of India (RBI) has decided to raise the aggregate limit on exposure of both lenders and borrowers on peer-to-peer (P2P) lending platforms to Rs 50 lakh from Rs 10 lakh earlier.

The decision was announced by the RBI governor, Shaktikanta Das, during a press conference on the Reserve Bank’s bi-monthly monetary policy committee (MPC) meeting on Thursday.

The decision, aimed at providing an impetus to lending platforms, came about after the Central Bank carried out a review of the sector’s functioning.

However, the exposure to an individual borrower has been maintained at Rs 50,000.

P2P lending platforms work by connecting lenders, who are willing to take on higher risks, with borrowers, who are unable or unlikely to get loans from banks or other financial institutions (FIs), via a digital platform.

Typically, medium, small and micro enterprises (MSMEs) and the traditionally unbanked or underbanked sections of the population benefit from such platforms that provide loans at reasonable interest rates and come under the purview of the RBI.

“It is also proposed to do away with the current requirement of escrow accounts to be operated by bank promoted trustee for transfer of funds having to be necessarily opened with the concerned bank. This will help provide more flexibility in operations,” Das said.

The move comes in the backdrop of a persistent decline in consumption demand that is seen as one of the main drivers of the current economic slowdown.

The Central Bank will issue a detailed set of guidelines soon.