Reserve Bank of India (RBI) on Friday barred P2P platforms from offering minimum returns, instant liquidity options and promoting P2P as an investment product. These platforms, which are supposed to bring together lenders and borrowers, are often found acting like deposit-takers and lenders, RBI said, in revised guidelines that take effect immediately. Individuals who lent on these platforms assuming they can get back their money anytime they want may be disappointed on Monday as the P2P firms and their fintech partners rush to comply with the circular, two senior P2P executives said on the condition of anonymity.
According to them, the circular brings India's P2P lending platforms to a grinding halt, a sector they said had 1-1.5 million lenders who have lent an estimated ₹10,000 crore. Some of the leading P2P lending platforms in India are Liquiloans, RupeeCircle, India P2P and Faircent. India's P2P industry has made rapid strides over the past four years, through partnerships with fintechs like BharatPe and Cred.
BharatPe has a 12% club and Cred has a 9% club for P2P, where they offer returns up to 12% and 9% respectively. Both tie-ups functioned initially on closed groups where the fintech's users borrowed and lent money. This practice has also been banned by RBI.
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