P2P companies can't take loan exposure

The Reserve Bank of India has mandated a minimum Rs 2 crore capital for those operating the peer-to-peer lending platforms and has prohibited them from taking any loan exposure themselves.

These fledgling firms that provide facilities for anonymous borrowers and lenders to come together, would be treated as nonbanking finance companies, said the regulator. "An NBFC-P2P shall not lend on its own and not provide any credit enhancement or credit guarantee," RBI said in its final guidelines.

RBI Deputy Governor NS Vishwanathan said they are not allowing the platforms to take any exposure to loans themselves." Internationally, wherever there have been failures it is because the P2Ps themselves were lending. Their platforms will allow borrowers and creditors to come and avail the facility," said Vishwanathan.

While not permitting any flow of international funds for lending through these platforms, RBI has allowed them to cross sell only loan specific insurance products. "There has not been any major jitters in the final guidelines, but there are certain points around leverage ratio, diclosure norms for platforms which will need more clarifications from the RBI," said Shankar Vaddadi, founder of Hyderabad's P2P platform iLend.

RBI has allowed P2P platforms to become full-fledged members of credit information companies (CICs) and have mandated them to share all loan disbursal related information with these entities regularly.

Access to CICs will enable defaulters on P2P platforms to get black listed by other lending entities like banks and traditional NBFCs, which would keep defaulters away from official lending channels.

To prevent money laundering through these platforms and to keep money lenders away, RBI said all transactions will be done electronically and through trust operated escrow accounts. "At least two escrow accounts, one for funds received from lenders and pending disbursal and the other for collection from borrowers shall be maintained."

While the P2P startup ecosystem has been positive about the RBI regulations which gives a sense of validity to the business, certain facets on lever age ratio raises concern.

"There is still a need for more clarity on the entire idea around the leverage ratio not exceeding 2, because we do not operate as banks and are not taking any loans on our own books," said Bhuvan Rustagi, cofounder of P2P platform Lendbox.

NSCBs Can Open Current Accounts with RBI
RBI has allowed non scheduled co-operative banks (NSCBs) to open current accounts with the central bank and maintain cash reserve ratio with the central bank instead of commercial banks or scheduled co-operative banks.Regional offices of the Reserve Bank have been advised to issue no objection certificates for opening current accounts for all licensed co-operative banks other than those under all-inclusive directions.

RBI Cuts SLR for Banks by 50 bps
Reserve Bank of India (RBI) has reduced the statutory liquidity ratio (SLR) for banks by 50 basis points to 19.50 per cent effective from the fortnight starting October 14.

SLR is the amount of deposits banks have to compulsorily invest in government securities. It is estimated that Rs 57,000 crore will be released in the banking system because of this cut.

Subsequently, the ceiling of government bonds which banks hold to maturity will be reduced in a phased manner from the current 20.25 per cent to 19.50 per cent by March 31, 2018.

Needs of Senior Citizens to be Protected
Banks cannot discourage senior citizens and differ ently abled persons from their branches, notwithstanding the need to push digital transactions and use of ATMs. RBI will issue instructions in this regard by October-end.

"It has been decid ed to instruct banks to put in place explicit mechanisms for meeting the needs of such persons so that they do not feel marginalised," RBI said.

Task Force on Public Credit Registry
The RBI has constituted a high-level task force on public credit registry (PCR) under the chairmanship of YM Deosthalee. The task force will propose a state-of-the-art information system, allowing for existing systems to be strengthened and integrated, and suggest a modular, prioritised roadmap for developing a transparent, comprehensive and near realtime PCR for India. It will submit its report by April 4, 2018.