Mumbai: The Reserve Bank of India on Friday tightened norms for non-banking financial company-peer to peer lending platforms (NBFC-P2P lending platforms) to improve transparency and compliance.

As per the revised master direction issued by the RBI, P2P platforms should not promote peer-to-peer lending as an investment product with features such as tenure-linked assured minimum returns, liquidity options, etc.

Guidelines issued in 2017

It said that non-banking financial company - peer-to-peer lending platform (NBFC-P2P lending platform) should not cross-sell any insurance product which is like credit enhancement or credit guarantee loan should be disbursed unless matching/mapping of lenders and borrowers is done as per the Board approved policy.RBI had issued guidelines for P2P lending in 2017. Such a platform acts as an intermediary that provides an online marketplace/platform to participants involved in peer-to-peer lending.

However, it has been observed that some of these platforms have adopted certain practices that violate the provisions of the Master Direction 2017.

The new guidelines came into effect immediately.

It said such practices, among other things, include violation of prescribed fund transfer mechanism and promotion of peer-to-peer lending as an investment product with features such as tenure-linked assured minimum returns. This includes providing liquidity options and, at times, acting as a depositor and lender rather than just being a platform. In view of violations by some entities, RBI issued revised guidelines. The revised guidelines have become effective immediately.