RBI to consult Sebi before finalizing P2P lending rules

Mumbai: The Reserve Bank of India (RBI) will soon come out with a concept paper on peer-to-peer (P2P) lending, and will hold consultations with capital markets regulator Securities and Exchange Board of India (Sebi) before finalizing the rules, deputy governor R. Gandhi said on Monday.

“A concept note on P2P lending will be put up on the RBI website for public comments shortly,” Gandhi said at a non-banking finance company (NBFC) event organized here by an industry body. Based on the feedback, the contours of P2P lending will be decided in consultation with the Sebi, he said.

“Sebi has come out with a paper from the securities market side, from the lending and borrowing side we will come out with a paper,” he said. P2P lending has been engaging the attention of financial sector regulators globally for quite some time. It is the practice of lending money to individuals or businesses through online services that bring together lenders directly with borrowers.

Thus far, the growth of such activity in India was at a low level, but P2P lending has shown accelerated growth over the last one year in the country, he said. “While encouraging innovations, the RBI cannot be oblivious to the risk posed by such institutions to the system,” Gandhi added. In the first bimonthly policy of the current fiscal, RBI this month announced that it will be coming out with concept paper on P2P lending, saying it has shown at accelerated growth over the last one year.

In the context NBFCs, Gandhi said RBI is actively looking to reduce complexities, make regulations easy to follow and harmonize them within the sector to the extent possible. “Instead of too many categories, can we harmonize the regulations across and reduce the number of classification. That work is going on,” he said.

Gandhi, however, said RBI’s stand is to harmonize not equalize the regulation. “That is similar entities should be subjected to similar regulations. This is driven primarily to remove arbitrage,” he said.

Securities and Exchange Board of India ( SEBI )