RBi’s Direction on Peer to Peer Lending Platforms

What is Peer to Peer Lending Plat form:

Peer-to-peer lend­ing (P2P lend­ing) is also known as Crowd Lend­ing. Its is a way of prac­tice of lend­ing mon­ey to indi­vid­u­als or busi­ness­es most­ly through online ser­vices that match lenders with bor­row­ers. Its basi­cal­ly a match mak­ing con­cept where this plat­forms match­es with the per­son who wants to invest with the per­son who wants to bor­row. Since peer-to-peer lend­ing com­pa­nies offer­ing these ser­vices gen­er­al­ly oper­ate online, they can run with low­er over­head and pro­vide the ser­vice more cheap­ly than tra­di­tion­al finan­cial insti­tu­tions. As a result, lenders can earn high­er returns com­pared to oth­er invest­ment prod­ucts in the mar­ket. While bor­row­ers can bor­row mon­ey at low­er inter­est rates.

The Reserve Bank of India, (here­inafter referred to as “the Bank”) issued a Noti­fi­ca­tion No DNBR.045/CGM (CDS)-2017 dat­ed August 24, 2017 in terms of sub-clause (iii) of clause(f) of sec­tion 45I of the Reserve Bank of India Act, 1934 (here­inafter referred to as “the Act”) and on being sat­is­fied that it is nec­es­sary to do so, in exer­cise of the pow­ers con­ferred under sec­tion 45IA, 45JA, 45L,and 45M of the Act, and of all the pow­ers enabling it in this behalf, here­by issues these Direc­tions for com­pli­ance of the same by every Non-Bank­ing Finan­cial Com­pa­ny that car­ries on the busi­ness of a Peer to Peer Lend­ing Plat­form.

1. Short title and com­mence­ment of the Direc­tions:

(1) These Direc­tions shall be known as the Non-Bank­ing Finan­cial Com­pa­ny – Peer to Peer Lend­ing Plat­form (Reserve Bank) Direc­tions, 2017.

(2) These Direc­tions shall come into force with imme­di­ate effect.

2. Applic­a­bil­i­ty of the Direc­tions

These Direc­tions shall apply to every Non-Bank­ing Finan­cial Com­pa­ny- Peer to Peer Lend­ing Plat­form (NBFC-P2P) as defined in these Direc­tions.

3. Scope

These Direc­tions pro­vide a frame­work for the reg­is­tra­tion and oper­a­tion of NBFC-P2Ps in India.

4. Def­i­n­i­tions

(1) In these Direc­tions, unless the con­text oth­er­wise requires, the terms used here­in shall bear the mean­ings assigned to them below —

  1. Com­pa­ny” means a com­pa­ny as defined in clause (20) of sec­tion 2 of the Com­pa­nies Act, 2013;
  2. Lever­age Ratio” means the Total Out­side Lia­bil­i­ties divid­ed by Owned Funds, of the NBFC-P2P.
  3. Non-per­form­ing asset” (NPA) means a loan where inter­est and/ or install­ment of prin­ci­pal remain over­due for a peri­od of 90 days or more.
  4. Par­tic­i­pant” means a per­son who has entered into an arrange­ment with an NBFC-P2P to lend on it or to avail of loan facil­i­ta­tion ser­vices pro­vid­ed by it;
  5. ”Peer to Peer Lend­ing Plat­form” means an inter­me­di­ary pro­vid­ing the ser­vices of loan facil­i­ta­tion via online medi­um or oth­er­wise, to the par­tic­i­pants as defined at Item (iv) of sub-para­graph (1) of para­graph 4 of these direc­tions;
  6. Non-bank­ing finan­cial com­pa­ny — Peer to Peer Lend­ing Plat­form” (NBFC-P2P) means a non-bank­ing insti­tu­tion which car­ries on the busi­ness of a Peer to Peer Lend­ing Plat­form.

(2) Words or expres­sions used in these Direc­tions but not defined here­in and defined in the Act or in the Com­pa­nies Act, 2013 shall have the same mean­ing as assigned to them under those Acts.

5. Reg­is­tra­tion

(1) Eli­gi­bil­i­ty Cri­te­ria

(i) No non-bank­ing insti­tu­tion oth­er than a com­pa­ny shall under­take the busi­ness of Peer to Peer Lend­ing Plat­form.

(ii) No NBFC-P2P shall com­mence or car­ry on the busi­ness of a Peer to Peer Lend­ing Plat­form with­out obtain­ing a Cer­tifi­cate of Reg­is­tra­tion (here­inafter referred to as “CoR”) from the Bank. Pro­vid­ed that an enti­ty car­ry­ing on the busi­ness of a Peer-to-Peer Lend­ing Plat­form as on the effec­tive date of these direc­tions, can con­tin­ue to do so, sub­ject to the con­di­tions laid down in sub-para­graph (2)(vii) in this Para­graph.

(iii) Every com­pa­ny seek­ing reg­is­tra­tion with the Bank as an NBFC-P2P shall have a net owned fund of not less than rupees twen­ty mil­lion or such high­er amount as the Bank may spec­i­fy.

(2) Process of Reg­is­tra­tion

(i) Every exist­ing and prospec­tive NBFC-P2P shall make an appli­ca­tion for reg­is­tra­tion to the Depart­ment of Non-Bank­ing Reg­u­la­tion, Mum­bai of the Bank, in the form which will be spec­i­fied by the Bank for the pur­pose. Exist­ing NBFC-P2Ps shall apply with­in three months from the issuance of these Direc­tions.

(ii) The Bank, for the pur­pose of con­sid­er­ing the appli­ca­tion for reg­is­tra­tion, shall require the fol­low­ing con­di­tions, among oth­ers, to be ful­filled:

  1. The com­pa­ny is incor­po­rat­ed in India;
  2. The com­pa­ny has the nec­es­sary tech­no­log­i­cal, entre­pre­neur­ial and man­age­r­i­al resources to offer such ser­vices to the par­tic­i­pants;
  3. The com­pa­ny has the ade­quate cap­i­tal struc­ture to under­take the busi­ness of Peer to Peer Lend­ing Plat­form;
  4. The pro­mot­ers and the Direc­tors of the com­pa­ny are fit and prop­er;
  5. The gen­er­al char­ac­ter of the man­age­ment of the com­pa­ny is not prej­u­di­cial to the pub­lic inter­est;
  6. The com­pa­ny has sub­mit­ted a plan for, or imple­ment­ed, a robust and secure Infor­ma­tion Tech­nol­o­gy sys­tem;
  7. The com­pa­ny has sub­mit­ted a viable busi­ness plan for con­duct­ing the busi­ness of Peer to Peer Lend­ing Plat­form;
  8. Pub­lic inter­est shall be served by the grant of CoR;
  9. Any oth­er con­di­tion as may be spec­i­fied by the Bank, ful­fill­ment of which, in the opin­ion of the Bank, is nec­es­sary to ensure that the com­mence­ment of or car­ry­ing on the busi­ness in India shall not be prej­u­di­cial to the pub­lic inter­est.

In case of prospec­tive NBFC-P2Ps

(iii) The Bank may, after being sat­is­fied that the con­di­tions spec­i­fied under para­graph 5(2)(ii) are ful­filled, grant in-prin­ci­ple approval for set­ting up of a Peer to Peer Lend­ing Plat­form, sub­ject to such con­di­tions which it may con­sid­er fit to impose.

(iv) The valid­i­ty of the in-prin­ci­ple approval issued by the Bank will be twelve months from the date of grant­i­ng such in-prin­ci­ple approval.

(v) With­in the peri­od of twelve months, the com­pa­ny shall put in place the tech­nol­o­gy plat­form, enter into all oth­er legal doc­u­men­ta­tions required and report posi­tion of com­pli­ance with the terms of grant of in-prin­ci­ple approval to the Bank.

(vi) The Bank may, after being sat­is­fied that the enti­ty is ready to com­mence oper­a­tions, grant a CoR as an NBFCP2P, sub­ject to con­di­tions as deemed fit by the Bank.

In case of exist­ing NBFC-P2Ps

(vii) Com­pa­nies that are under­tak­ing the busi­ness of Peer to Peer Lend­ing Plat­form, as defined at para­graph 4(1)(v) of these direc­tions, as on the date of effect of these direc­tions, shall apply for reg­is­tra­tion as an NBFC-P2P to the Bank with­in 3 months from that date. Such com­pa­nies, which have applied to the Bank for reg­is­tra­tion as an NBFCP2P, shall be per­mit­ted to con­tin­ue the busi­ness of a Peer to Peer Lend­ing Plat­form till their appli­ca­tion for issuance of CoR is reject­ed, sub­ject to such con­di­tions, includ­ing wind­ing down of busi­ness, as the Reserve Bank may impose.

(viii) The Bank may can­cel the CoR grant­ed to an NBFC-P2P, if such com­pa­ny –

  1. ceas­es to car­ry on the busi­ness of Peer to Peer Lend­ing Plat­form in India; or
  2. has failed to com­ply with any con­di­tion sub­ject to which the CoR has been issued to it; or
  3. is no longer eli­gi­ble to hold the CoR; or
  4. at any time fails to ful­fill any of the con­di­tions referred to in para­graphs 5(2)(ii) and 5(2)(v); or
  5. fails to –
    (i) com­ply with any Direc­tion issued by the Bank; or
    (ii) main­tain accounts, pub­lish and dis­close its finan­cial posi­tion in accor­dance with the require­ments of any law or any Direc­tion or order issued by the Bank; or
    (iii) sub­mit or offer for inspec­tion its books of account or oth­er rel­e­vant doc­u­ments when so demand­ed by the Bank.

6. Scope of Activ­i­ties

(1) An NBFC-P2P shall-

  1. act as an inter­me­di­ary pro­vid­ing an online mar­ket­place or plat­form to the par­tic­i­pants involved in Peer to Peer lend­ing;
  2. not raise deposits as defined by or under Sec­tion 45I(bb) of the Act or the Com­pa­nies Act, 2013;
  3. not lend on its own;
  4. not pro­vide or arrange any cred­it enhance­ment or cred­it guar­an­tee;
  5. not facil­i­tate or per­mit any secured lend­ing linked to its plat­form; i.e. only clean loans will be per­mit­ted;
  6. not hold, on its own bal­ance sheet, funds received from lenders for lend­ing, or funds received from bor­row­ers for ser­vic­ing loans; or such funds as stip­u­lat­ed in para­graph 9;
  7. not cross sell any prod­uct except for loan spe­cif­ic insur­ance prod­ucts;
  8. not per­mit inter­na­tion­al flow of funds;
  9. ensure adher­ence to legal require­ments applic­a­ble to the par­tic­i­pants as pre­scribed under rel­e­vant laws.
  10. store and process all data relat­ing to its activ­i­ties and par­tic­i­pants on hard­ware locat­ed with­in India.

(2) Fur­ther, NBFC-P2P shall-

  1. under­take due dili­gence on the par­tic­i­pants;
  2. under­take cred­it assess­ment and risk pro­fil­ing of the bor­row­ers and dis­close the same to their prospec­tive lenders;
  3. require pri­or and explic­it con­sent of the par­tic­i­pant to access its cred­it infor­ma­tion;
  4. under­take doc­u­men­ta­tion of loan agree­ments and oth­er relat­ed doc­u­ments;
  5. pro­vide assis­tance in dis­burse­ment and repay­ments of loan amount;
  6. ren­der ser­vices for recov­ery of loans orig­i­nat­ed on the plat­form.

(3) NBFC-P2P shall not under­take any activ­i­ty oth­er than those stat­ed in paras 6(1) and 6(2) of these Direc­tions. Deploy­ment of investible funds by an NBFC-P2P in instru­ments spec­i­fied by the Bank, not for trad­ing, shall how­ev­er be per­mit­ted.

7. Pru­den­tial Norms

(1) NBFC-P2P shall main­tain a Lever­age Ratio not exceed­ing 2.

(2) The aggre­gate expo­sure of a lender to all bor­row­ers at any point of time, across all P2Ps, shall be sub­ject to a cap of ₹ 10,00,000/-.

(3) The aggre­gate loans tak­en by a bor­row­er at any point of time, across all P2Ps, shall be sub­ject to a cap of ₹ 10,00,000/-.

(4) The expo­sure of a sin­gle lender to the same bor­row­er, across all P2Ps, shall not exceed ₹ 50,000/-.

(5) The matu­ri­ty of the loans shall not exceed 36 months.

(6) P2Ps shall obtain a cer­tifi­cate from the bor­row­er or lender, as applic­a­ble, that the lim­its pre­scribed above are being adhered to.

8. Oper­a­tional Guide­lines

(1) NBFC-P2P shall have a Board approved pol­i­cy in place -

  1. Set­ting out the eli­gi­bil­i­ty cri­te­ria for par­tic­i­pants on it.
  2. Deter­min­ing the pric­ing of ser­vices pro­vid­ed by it.
  3. Set­ting out the rules for match­ing lenders with bor­row­ers in an equi­table and non-dis­crim­i­na­to­ry man­ner.

(2) The out­sourc­ing of any activ­i­ty by NBFC-P2P does not dimin­ish its oblig­a­tions and it shall be respon­si­ble for the actions of its ser­vice providers includ­ing recov­ery agents and the con­fi­den­tial­i­ty of infor­ma­tion per­tain­ing to the par­tic­i­pant that is avail­able with the ser­vice providers.

(3) No loan shall be dis­bursed unless the indi­vid­ual lender/s have approved the indi­vid­ual recipient/s of the loan and all con­cerned par­tic­i­pants have signed the loan con­tract.

9. Fund Trans­fer Mech­a­nism

Fund trans­fer between the par­tic­i­pants on the Peer to Peer Lend­ing Plat­form shall be through escrow account mech­a­nisms which will be oper­at­ed by a trustee. At least two escrow accounts, one for funds received from lenders and pend­ing dis­bur­sal, and the oth­er for col­lec­tions from bor­row­ers, shall be main­tained. The trustee shall manda­to­ri­ly be pro­mot­ed by the bank main­tain­ing the escrow accounts. All fund trans­fers shall be through and from bank accounts and cash trans­ac­tion is strict­ly pro­hib­it­ed. The mech­a­nism as described in the Annex-I may be adopt­ed by the NBFC-P2P.

10. Sub­mis­sion of data to Cred­it Infor­ma­tion Com­pa­nies (CICs)

(1) An NBFC-P2P shall become mem­ber of all CICs and sub­mit data (includ­ing his­tor­i­cal data) to them.

(2) NBFC-P2P shall:

(i) keep the cred­it infor­ma­tion (relat­ing to bor­row­er trans­ac­tions on the plat­form) main­tained by it, updat­ed reg­u­lar­ly on a month­ly basis or at such short­er inter­vals as may be mutu­al­ly agreed upon between the NBFC-P2P and the CICs;

(ii) take all such steps which may be nec­es­sary to ensure that the cred­it infor­ma­tion fur­nished by it is up to date, accu­rate and com­plete;

(iii) include nec­es­sary con­sents in the agree­ment with the par­tic­i­pants for pro­vid­ing the required cred­it infor­ma­tion;

11. Trans­paren­cy and Dis­clo­sure Require­ments

(1) An NBFC-P2P shall be required to dis­close the fol­low­ing:

(i) to the lender

  1. details about the borrower/s includ­ing per­son­al iden­ti­ty, required amount, inter­est rate sought and cred­it score as arrived by the NBFC-P2P.
  2. details about all the terms and con­di­tions of the loan, includ­ing like­ly return, fees and tax­es;

(ii) to the bor­row­er — details about the lender/s includ­ing pro­posed amount, inter­est rate offered but exclud­ing per­son­al iden­ti­ty and con­tact details;

(iii) pub­licly dis­close on its web­site:

  1. overview of cred­it assessment/score method­ol­o­gy and fac­tors con­sid­ered;
  2. dis­clo­sures on usage/protection of data;
  3. griev­ance redres­sal mech­a­nism;
  4. port­fo­lio per­for­mance includ­ing share of non-per­form­ing assets on a month­ly basis and seg­re­ga­tion by age; and
  5. its broad busi­ness mod­el.

(2) NBFC-P2P shall ensure that the pro­vid­ing of ser­vices to a par­tic­i­pant, who has applied for avail­ing of such ser­vices, is backed by appro­pri­ate agree­ments between the par­tic­i­pants and the NBFC-P2P. The agree­ments shall cat­e­gor­i­cal­ly spec­i­fy all the terms and con­di­tions among the bor­row­er, the lender and the NBFC-P2P.

(3) The inter­est rates dis­played on the plat­form shall be in Annu­al­ized Per­cent­age Rate (APR) for­mat.

12. Fair Prac­tices Code

(1) An NBFC-P2P shall put in place a Fair Prac­tices Code, based on the Guide­lines out­lined here­in, with the approval of its Board. The same should be put up on its web-site, for the infor­ma­tion of var­i­ous stake­hold­ers.

(2) NBFC-P2P shall be required to obtain explic­it affir­ma­tion from the lender stat­ing that he/ she has under­stood the risks asso­ci­at­ed with the pro­posed trans­ac­tion and that there is no guar­an­tee of return and that there exists a like­li­hood of loss of entire prin­ci­pal in case of default by a bor­row­er. The plat­form shall not pro­vide any assur­ance for the recov­ery of loans. Fur­ther, the plat­form shall dis­play a caveat that “Reserve Bank of India does not accept any respon­si­bil­i­ty for the cor­rect­ness of any of the state­ments or rep­re­sen­ta­tions made or opin­ions expressed by the NBFC-P2P, and does not pro­vide any assur­ance for repay­ment of the loans lent on it”.

(3) In the mat­ter of recov­ery of loans, NBFC-P2P shall ensure that the staff are ade­quate­ly trained to deal with the par­tic­i­pants in an appro­pri­ate man­ner and shall not resort to harass­ment viz; per­sis­tent­ly both­er­ing the bor­row­ers at odd hours, use of coer­cion for recov­ery of loans, etc.

(4) NBFC-P2P shall ensure that any infor­ma­tion relat­ing to the par­tic­i­pants received by it is not dis­closed to any third par­ty with­out the con­sent of the par­tic­i­pants.

(5) The Board of Direc­tors shall also pro­vide for peri­od­ic review of the com­pli­ance of the Fair Prac­tices Code and the func­tion­ing of the griev­ances redres­sal mech­a­nism at var­i­ous lev­els of man­age­ment. A con­sol­i­dat­ed report of such reviews shall be sub­mit­ted to the Board at reg­u­lar inter­vals, as may be pre­scribed by it.

13. Par­tic­i­pant Griev­ance Redres­sal

(1) An NBFC-P2P shall put in place a Board approved pol­i­cy to address par­tic­i­pant grievances/complaints. Com­plaints shall be handled/ dis­posed of by NBFC-P2P with­in such time and in such man­ner as pro­vid­ed for in its Board approved pol­i­cy, but in any case not beyond a peri­od of one month from the date of receipt.

(2) At the oper­a­tional lev­el, NBFC-P2P shall dis­play the fol­low­ing infor­ma­tion promi­nent­ly, for the ben­e­fit of par­tic­i­pants, on the web­site:

(i) the name and con­tact details (Tele­phone / Mobile Nos. as also email address) of the Griev­ance Redres­sal Offi­cer who can be approached for res­o­lu­tion of com­plaints against the NBFC-P2P.

(ii) that if the com­plaint / dis­pute is not redressed with­in a peri­od of one month, the par­tic­i­pant may appeal to the Cus­tomer Edu­ca­tion and Pro­tec­tion Depart­ment of the Bank.

14. Infor­ma­tion Tech­nol­o­gy Frame­work, Data Secu­ri­ty and Busi­ness Con­ti­nu­ity Plan

(1) Busi­ness of an NBFC-P2P shall be pri­mar­i­ly Infor­ma­tion Tech­nol­o­gy (IT) dri­ven. The tech­nol­o­gy should be scal­able to han­dle growth in busi­ness.

(2) There should be ade­quate safe­guards built in its IT sys­tems to ensure that it is pro­tect­ed against unau­tho­rized access, alter­ation, destruc­tion, dis­clo­sure or dis­sem­i­na­tion of records and data. The Bank may from time to time, pre­scribe tech­ni­cal spec­i­fi­ca­tions, as deemed fit.

(3) NBFC-P2P should have a Board approved Busi­ness Con­ti­nu­ity Plan in place for safe­keep­ing of infor­ma­tion and doc­u­ments and ser­vic­ing of loans for full tenure in case of clo­sure of plat­form.

(4) Infor­ma­tion Sys­tem Audit of the inter­nal sys­tems and process­es shall be in place and shall be con­duct­ed at least once in two years by CISA cer­ti­fied exter­nal audi­tors. Report of the exter­nal audi­tor shall be sub­mit­ted to the Region­al Office of the Depart­ment of Non-Bank­ing Super­vi­sion of the Bank, under whose juris­dic­tion the Reg­is­tered Office of the NBFC-P2P is locat­ed, with­in one month of sub­mis­sion of the report by the exter­nal audi­tor.

(5) There shall be rea­son­able arrange­ments in place to ensure that loan agree­ments facil­i­tat­ed on the plat­form will con­tin­ue to be man­aged and admin­is­tered by a third par­ty in accor­dance with the con­tract terms, if the NBFC-P2P ceas­es to car­ry on the P2P activ­i­ty.

(6) NBFC-P2P would be required to con­form with Mas­ter Direc­tion DNBS.PPD. No. 04/66.15.001/2016–17 dat­ed June 8, 2017 on Infor­ma­tion Tech­nol­o­gy Frame­work for NBFC Sec­tor, as stip­u­lat­ed in Sec­tion A from incep­tion.

15. Fit and Prop­er Cri­te­ria

(1) An NBFC-P2P shall

(i) ensure that a pol­i­cy is put in place, with the approval of the Board of Direc­tors, set­ting out ‘Fit and Prop­er’ cri­te­ria to be met by its direc­tors. These cri­te­ria shall be con­sis­tent with the require­ments con­tained in Annex­es II to IV;

(ii) ensure that Direc­tors meet the fit and prop­er cri­te­ria at the time of their appoint­ment and on an ongo­ing basis, cer­ti­fy and inform the same to the Bank on a half-year­ly basis;

(iii) obtain a dec­la­ra­tion and under­tak­ing from the Direc­tors giv­ing addi­tion­al infor­ma­tion. The dec­la­ra­tion and under­tak­ing shall be on the lines of the for­mat giv­en in Annex III;

(iv) obtain a Deed of Covenants signed by the Direc­tors, which shall be in the for­mat as giv­en in Annex IV;

(v) advise the Bank of any change of Direc­tors, or key man­age­ment per­son­nel, and issue a cer­tifi­cate from the Man­ag­ing Director/CEO of the NBFC-P2P that fit and prop­er cri­te­ria in selec­tion of the Direc­tors have been fol­lowed. The state­ment must reach the Region­al Office of the Depart­ment of Non-Bank­ing Super­vi­sion of the Bank under whose juris­dic­tion the Reg­is­tered Office of the NBFC-P2P is locat­ed, with­in 15 days of the change. An annu­al state­ment shall be sub­mit­ted by the CEO of the NBFC-P2P to the said Region­al Office, giv­ing the names of its Direc­tors for the quar­ter end­ing on March 31, which should be cer­ti­fied by the audi­tors.

The Bank, if it deems fit and in pub­lic inter­est, may inde­pen­dent­ly assess whether the direc­tors are, indi­vid­u­al­ly or col­lec­tive­ly, fit and prop­er and the NBFC-P2P shall remove the con­cerned director/s, on being advised by the Bank to do so.

16. Require­ment to obtain pri­or approval of the Bank for allot­ment of shares, acqui­si­tion or trans­fer of con­trol of NBFC-P2P

(1) Pri­or writ­ten per­mis­sion of the Bank shall be required for –

(i) any allot­ment of shares which will take the aggre­gate hold­ing of an indi­vid­ual or group to equiv­a­lent of 26 per cent and more of the paid up cap­i­tal of the NBFC-P2P;

Explan­ta­tion: For the pur­pose of this para­graph, the term

  1. hold­ing” refers to both direct and indi­rect hold­ing, ben­e­fi­cial or oth­er­wise. The hold­ing will be com­put­ed with ref­er­ence to the hold­ing of the appli­cant, rel­a­tives (where the appli­cant is a nat­ur­al per­son) and asso­ci­at­ed enter­pris­es.
  2. rel­a­tive” has the same mean­ing as assigned under sec­tion 2(77) of the Com­pa­nies Act, 2013.
  3. asso­ciate entre­prise” has the same mean­ing as assigned to it in Expla­na­tion I to Sec­tion 12B of the Bank­ing Reg­u­la­tion Act, 1949.

(ii) any takeover or acqui­si­tion of con­trol of an NBFC-P2P, which may or may not result in change of man­age­ment;

(iii) any change in the share­hold­ing of an NBFC-P2P, includ­ing pro­gres­sive increas­es over time, which would result in acqui­si­tion by/ trans­fer of share­hold­ing to, any enti­ty, of 26 per cent or more of the paid up equi­ty cap­i­tal of the NBFC-P2P;

Pro­vid­ed that, pri­or approval would not be required in case of any share­hold­ing going beyond 26% due to buy­back of shares / reduc­tion in cap­i­tal where it has approval of a com­pe­tent Court. The same is to be report­ed to the Bank not lat­er than one month from its occur­rence;

(iv) any change in the man­age­ment of the NBFC-P2P which would result in change in more than 30 per cent of the Direc­tors, exclud­ing inde­pen­dent Direc­tors;

(v) any change in share­hold­ing that will give the acquir­er a right to nom­i­nate a Direc­tor.

Appli­ca­tion for Pri­or Approval

(2) An NBFC-P2P shall sub­mit an appli­ca­tion, on the com­pa­ny let­ter head, for obtain­ing pri­or approval of the Bank, along with the fol­low­ing doc­u­ments:

(i) Infor­ma­tion about the pro­posed Directors/ share­hold­ers as per Annex V;

(ii) Sources of funds of the pro­posed share­hold­ers acquir­ing the shares in the NBFC-P2P;

(iii) Dec­la­ra­tion by the pro­posed Directors/ share­hold­ers that they are not asso­ci­at­ed with any unin­cor­po­rat­ed body that is accept­ing deposits;

(iv) Dec­la­ra­tion by the pro­posed Directors/ share­hold­ers that they are not asso­ci­at­ed with any com­pa­ny, the appli­ca­tion for CoR of which has been reject­ed by the Bank;

(v) Dec­la­ra­tion by the pro­posed Directors/ share­hold­ers that they have not been con­vict­ed of any crime and that there are no pend­ing crim­i­nal cas­es against them, includ­ing pro­ceed­ings ini­ti­at­ed under sec­tion 138 of the Nego­tiable Instru­ments Act,1881; and

(vi) Bankers’ Report on the pro­posed Direc­tors / share­hold­ers.

(3) Appli­ca­tions in this regard shall be sub­mit­ted to the Region­al Office of the Depart­ment of Non-Bank­ing Super­vi­sion of the Bank where the com­pa­ny is reg­is­tered.

Pub­lic Notice about Change in Control/ Man­age­ment

(4) A pub­lic notice of at least 30 days shall be giv­en before effect­ing the sale of, or trans­fer of the own­er­ship by sale of shares, or trans­fer of con­trol, whether with or with­out sale of shares. Such pub­lic notice shall be giv­en by the NBFC-P2P and also by the oth­er par­ty or joint­ly by the par­ties con­cerned, after obtain­ing the pri­or per­mis­sion of the Bank.

(5) The pub­lic notice shall indi­cate the inten­tion to sell or trans­fer ownership/control, the par­tic­u­lars of trans­fer­ee and the rea­sons for such sale or trans­fer of ownership/ con­trol. The notice shall be pub­lished in at least one lead­ing nation­al and in one lead­ing local (cov­er­ing the place of reg­is­tered office) ver­nac­u­lar news­pa­per.

Infor­ma­tion with respect to change of address, direc­tors, audi­tors, etc. to be sub­mit­ted

(6) Every NBFC-P2P shall com­mu­ni­cate, not lat­er than one month from the occur­rence of any change in:

(i) the com­plete postal address, tele­phone number/s and fax number/s of the reg­is­tered / cor­po­rate office;

(ii) the res­i­den­tial address­es of the Direc­tors of the com­pa­ny;

(iii) the names and office address of the audi­tors of the com­pa­ny; and

(iv) the spec­i­men sig­na­tures of the offi­cers autho­rised to sign on behalf of the NBFC-P2P to the Region­al Office of the Depart­ment of Non-Bank­ing Super­vi­sion of the Bank with­in whose juris­dic­tion the Reg­is­tered Office of the NBFC-P2P is locat­ed.

17. Report­ing Require­ments

(1) The Bank may, from time to time, pre­scribe return/s to be sub­mit­ted by NBFC-P2P, as it deems fit.

(2) The fol­low­ing quar­ter­ly state­ments shall be sub­mit­ted to the afore­said Region­al Office with­in 15 days after the quar­ter to which these relate.

(i) A state­ment, show­ing the num­ber and amount in respect of loans;

  1. dis­bursed dur­ing the quar­ter;
  2. closed dur­ing the quar­ter; and
  3. out­stand­ing at the begin­ning and at the end of the quar­ter, includ­ing the num­ber of lenders and bor­row­ers out­stand­ing as at the end of the quar­ter

(ii) The amount of funds held in the Escrow Account, bifur­cat­ed into funds received from lenders and funds received from bor­row­ers, with cred­it and deb­it sum­ma­tions for the quar­ter.

(iii) Num­ber of com­plaints out­stand­ing at begin­ning and at end of quar­ter, and dis­posed of dur­ing the quar­ter, bifur­cat­ed as received from

  1. lenders and
  2. bor­row­ers.

(iv) The Lever­age Ratio, with details of its numer­a­tor and denom­i­na­tor.

18. Super­vi­sion

The Bank may, at any time, cause an inspec­tion by one or more of its offi­cers or employ­ees, or by any oth­er agency as Bank may deem fit, of any NBFC-P2P.

19. Exemp­tions

The Bank may, if it con­sid­ers nec­es­sary for avoid­ing any hard­ship or for any oth­er just and suf­fi­cient rea­son, grant exten­sion of time to com­ply with or exempt any NBFC-P2P or class of NBFC-P2Ps or all NBFC-P2Ps, from all or any of the pro­vi­sions of these Direc­tions, either gen­er­al­ly or spe­cial­ly, and sub­ject to such con­di­tions as it may impose.

20. Clar­i­fi­ca­tions

If any ques­tion aris­es relat­ing to the inter­pre­ta­tion of these direc­tions, the mat­ter shall be referred to the Bank and the deci­sion of the Bank shall be final.

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