An Overview of P2P License

Do you have a desire to dominate the P2P lending industry? If yes, you are at the right place. We will help you get a P2P license in India effortlessly.
A P2P (Peer to Peer) license, issued by the Reserve Bank of India (RBI), enables individuals to lend or borrow money directly, eliminating the need for a financial institution as an intermediary. P2P licensing has emerged as a popular method for managing copyrighted works.
The P2P license is a type of license agreement that provides reports on the usage of work and pays agreed-upon compensation regularly. Furthermore, a P2P license enables entities to legally borrow money directly without the involvement of traditional financial platforms, maintaining a secure and transparent environment for lenders and borrowers.
Speak to consultants at Fastzeal to obtain a P2P license in India within the desired time.

What is Peer to Peer Lending?

The term P2P (Peer to Peer) denotes an online platform or portal that works as an intermediary between lenders and borrowers. The concept of peer-to-peer lending is a process of lending money to people or business houses via online services, which assist in matching lenders and borrowers. Therefore, peer-to-peer lending has become one of the most comfortable and primary choices for everyone looking for venture funding.

Peer to Peer Lending is a mode of debt financing that permits individuals to lend & borrow money without the actual participation and involvement of a financial institution as an intermediary. Furthermore, the P2P lending industry is a strategy for obligation financing regulated by the Reserve Bank of India, making it a cost-effective strategy.

Benefits of Obtaining a Peer to Peer Lending License

The benefits of obtaining a peer-to-peer lending license are as follows:

1. Fast Processing of Application

   • Obtaining a P2P lending license enables a fast and convenient mode for individuals to lend and borrow money directly, streamlining the process without traditional financial intermediaries.

2. Lower Interest Rates

   • Obtaining a P2P license enables borrowers to secure easy loans at lower interest rates compared to regular banks or credit unions.

3. Alternative to Traditional Loan Facility

   • The grant of a P2P license offers an alternative option for providing loans compared to traditional lenders. Moreover, loans given by P2P lending platforms are more flexible than traditional loans.

4. Transparency & Control

   • The P2P license enables lending platforms to offer greater transparency and control to lenders and borrowers.

5. Increased Financial Diversity

   • The issuance of a P2P license ensures increasing financial diversity by offering different funding choices to individuals and businesses.

6. Market Credibility

   • The grant of a P2P license secures market credibility and expands the lending ecosystem for lending platforms.

Eligibility Criteria for P2P Lending License in India

The RBI specifies the eligibility criteria required for obtaining a P2P lending license in India as follows:

• A company wishing to acquire a Peer to Peer Lending License in India must first obtain a Certificate of Registration under the Companies Act 2013.

• Must possess a NOF (Net Owned Funds), i.e., a minimum capital of Rs 2 crores.

• Must have an adequate capital structure to undertake the business of Peer to Peer lending platforms in India.

• The applicant must submit a plan for implementing a robust and secure Information Technology Mechanism.

• The applicant must submit a viable business plan to run a Peer to Peer Digital Lending Portal.

• The general character of the company’s management must not be detrimental to the interest of the public.

• All proposed Directors and Promoters must be proper and fit.

• If a company was already operating a P2P lending business before obtaining a Certificate of Registration became mandatory, it must comply with all conditions & guidelines prescribed by the RBI.

Documents Required to Obtain P2P License in India

The list of documents required for obtaining a P2P license in India includes:

• Company’s Certificate of Incorporation

• Memorandum and Articles of Association

• Company Acquired Entrepreneurial and Technological Resources

• Information of Managers and Shareholders

• Copy of Business Continuity Plan (Business Plan)

• Audited Balance Sheet

• Net Worth Certificate

• Fit and Proper Criteria Declaration

• Website Source Code

How to Get a P2P License in India?

The steps involved in obtaining an NBFC P2P License in India are:

1. Filing of Application

   • The applicant company seeking an NBFC P2P license must file an application online via the RBI's COSMOS portal or offline through the RBI's Department of Regulation in Mumbai.

2. Document Submission

   • Submit a hard copy of the application and attached documents to the RBI's regional office.

3. Grant of In-Principal Approval

   • After verifying the eligibility criteria and documents, the RBI grants in-principal approval for setting up a P2P lending platform.

4. Establish Technology Platform

   • Once approval is granted, the applicant must establish a technology platform within 12 months from the approval date.

5. Grant of Peer to Peer Lending License

   • After verifying compliance, the RBI grants the final Peer to Peer Lending License.

Characteristics of Peer to Peer Lending Platforms in India

• Online portals that match borrowers with suitable lenders.

• No requirement for a prior relationship between lender and borrower.

• Not engaged in any financial institution operating as an intermediary.

• Lenders and borrowers make their own borrowing and investment decisions.

• Maintain transparency in operations for both borrowers and investors.

• Implement strong security protocols to safeguard sensitive financial and personal information.

• Ensure financial stability for economic downturns or unexpected challenges.

• Have a system for resolving user complaints, maintaining trust, and addressing concerns.

Mandatory Disclosures Required for P2P License in India

The Reserve Bank of India (RBI) has mandated several disclosures for obtaining a Peer-to-Peer (P2P) lending license in India. These disclosures ensure transparency and regulatory compliance. Below are the key mandatory disclosures:

1. Borrower Information

P2P lending platforms must record and maintain detailed borrower information, including:

• Personal identity
• Credit scores
• Interest rates
  
  

2. Portfolio Performance

P2P platforms must disclose their portfolio performance, including:

• Non-performing assets (NPAs)
• Losses incurred by lenders
• Segregation of NPAs by age (monthly basis)
  
  

3. Credit Assessment

Platforms must conduct credit assessments and disclose:

• Credit scores
• Loan purpose
• Loan terms for borrowers and lenders
  
  

4. Score Methodology

P2P lending platforms must disclose the methodology used to assess borrowers' creditworthiness.

5. Disclosure on Data Protection

Platforms must disclose how they protect borrower and lender data, ensuring compliance with data privacy regulations.

6. Grievance Redressal Mechanism

P2P platforms must comply with and disclose their adherence to the RBI-Integrated Ombudsman Scheme, 2021.

7. Shares of Non-Performing Assets (NPAs)

Platforms are required to provide monthly disclosures on NPAs to support lender decision-making.

8. Broad Business Model Disclosure

P2P platforms must provide a detailed disclosure of their business model to ensure compliance with regulatory guidelines and risk management.

Scope of Activities of P2P Platforms After Obtaining a License

Activities Allowed:

1. Providing an online platform for peer-to-peer lending.
2. Ensuring compliance with legal and regulatory requirements.
3. Storing and processing data on servers located within India.
4. Lending only clean loans (i.e., unsecured loans).

Activities Not Permitted:

1. Lending money to themselves.
2. Raising deposits under the Companies Act, 2013.
3. Providing credit enhancement or guarantees.
4. Facilitating secured lending.
5. Holding funds from lenders or borrowers in their own balance sheet.
6. Cross-selling products except for loan-specific insurance.

Facilitating international fund flows.

Responsibilities of P2P Platforms with a P2P License

1. Conduct credit assessment and disclose borrower risk profiles.
2. Obtain explicit consent to access participants' credit data.
3. Maintain loan agreements and transaction records.
4. Facilitate loan origination, listing, repayment, and recovery.
5. Ensure regular reporting and auditing.
6. Stay updated on financial and technological advancements.
7. Comply with AML, KYC, and data protection regulations.
8. Perform due diligence on participants before approval.

Difference Between Crowd Funding & P2P Lending

Why Trust Fastzeal for a P2P Lending License in India?

Expert Consultation

• 10+ Years of Experience in P2P licensing and financial compliance.
  
  

Time Efficiency

• Holding a 75% market share in digital lending licensing.
  
  

Paperwork & Documentation

• Providing simplified legal assistance for compliance.
  
  

Compliance Management

• Offering 24/7 dedicated support throughout the process.
  
  

Customized Solutions

• Successfully saved 15 lakh+ hours for entrepreneurs.
  
  

Regulatory Understanding

• Ensuring full compliance with RBI and financial regulations.
  
  

24/7 Support & Proven Track Record

• Providing real-time updates on application progress.
  
  
  

Post-Licensing Assistance

Guaranteeing ongoing compliance, disclosures, and regulatory adherence.

Reduced Compliance Burden

Helping reduce compliance efforts by up to 30%.