All peer-to-peer lending (P2P) platforms will be regulated by the Reserve Bank of India (RBI), according to a government of India notification released on Wednesday. The gazette notification stated that all the P2P loan platforms will be treated as non-banking financial companies (NBFCs) and will be brought under the ambit of the banking regulator. The notification is a precursor to the norms that RBI is likely to release for regulation of P2P lending in India. The notification will help P2P lenders gain official recognition, opening new avenues for fund-raising and business expansion. P2P lending firms unlike aggregator firms hold the lender’s money before giving it out to the borrower which creates a risk factor. Guidelines on P2P lending by the regulator will be important as it involves individual investors’ money. With the notification coming in, the lenders will be more at ease while participating on P2P lending platforms. Banks may consider tie-ups with P2P lenders in future as the sector will now function as per RBI regulations.

(Live Mint)