Peer-to-Peer Lending License- An Overview
A peer-to-peer lending license is an RBI regulatory permit allowing entities to offer digital lending and borrowing platforms without intermediaries.
With increasing digitalization and the shift towards a cashless economy, peer-to-peer lending is emerging as a fast-growing market for investment and fund borrowing. All transactions are now conducted online, providing convenient, fully remote access for borrowers.
The Indian P2P market is currently valued at around ₹9,000-10,000 crore. It’s the perfect time to launch your P2P lending platform. Contact DrNBFC today for expert legal documentation, seamless application filing, and full RBI compliance support, and obtain your Peer-to-peer lending license within your desired timeline, from the location of your choice.
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Benefits of P2P Lending License
The benefits of a P2P lending license in India are as follows:
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Credibility
With a peer-to-peer license, you can earn credibility in the market. Borrowers from all over the country prefer a platform that is regulated by government permits and follows strict protocols.
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Data Protection
The peer-to-peer lending license requires entities to install robust tech infrastructure to prevent fraud and protect sensitive financial data, ensuring consumers that their data will be secured in the system.
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Transparency
The Reserve Bank of India has an extensive customer KYC process, allowing the lender to make sound decisions within their risk bandwidth.
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Risk Mitigation
Lenders’ investments are secured through various RBI-mandated due diligence and risk management protocols, providing a proper mechanism for debt recovery against defaults.
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Low Interest Rates
As compared to traditional financial and banking institutions, the interest rates are lower due to online streamlined processing and cost effectiveness, which benefits borrowers and shifts the market towards digital lending.
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Investor Friendly
An RBI-licensed platform with high-tech infrastructure is more likely to attract investors because of its transparency and government oversight, enabling a sense of trust among stakeholders.
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High Returns
With the elimination of an intermediary, the P2P lending platform with a P2P lending license provides better and higher returns on investments as opposed to traditional investing options like bonds and savings accounts.
Timeline to Register a P2P Lending License with DrNBFC
The schedule to register a P2P lending license with DrNBFC is 9 to 12 months from application to final registration approval by the RBI. Our legal associates handle all the queries to ensure you get your license on time, eliminating any regulatory hurdles by coordinating with you through real-time updates.
It must be noted that this timeline is inclusive of the in-principle approval granted by the RBI to establish your tech platform and meet requirements, as prescribed by the apex regulatory authority.
How to Get NBFC P2P License in India with DrNBFC?
Scroll down and find out how DrNBFC can help you get an NBFC P2P license in India:
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Step 1 - Register Your Company
Firstly, we’ll register your company with the Ministry of Corporate Affairs in accordance with the Companies Act of 2013 if your business isn’t already registered.
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Step 2 - Prepare Documents
We’ll prepare your documents, namely the MOA, certificate of incorporation, business plan, lease agreements, KYC details of the directors, and net-worth certificate.
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Step 3 - Development of the Website & Mobile Application
Our engineers will build a website and mobile application for your P2P lending platform.
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Step 4 - Filing of the Application
Once we’ve assembled all the documents, we’ll apply for the registration to the RBI online portal on your behalf.
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Step 5 - Review by the RBI
The Reserve Bank of India will examine your application to verify basic requirements and compliance mandates required for a peer-to-peer lending license.
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Step 6 - Grant of In-Principle Approval
The RBI will approve your application and provide an in-principle authorization for 12 months during which you must go live on your platform as per its compliance mandates.
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Step 7 - Establishment of the Tech Platforms
Once you’ve received the in-principle approval from the RBI, we’ll help you launch and secure your website.
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Step 8 - Final Approval and Grant of License
The RBI will conduct a final review of your documents and platform to ensure it complies with the P2P lending license regulations, and accordingly issue the grant certificate of registration, authorizing you to operate as a peer-to-peer lending platform in India.
Obtain P2P lending license with DrNBFC experts and gear up to rule the P2P lending industry.
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Finding the right solutions to get a P2P license is difficult, but not impossible. With DrNBFC’s expert-led guidance, you can become a major player in the billion-dollar market of India.
Features of Peer-to-Peer Lending License
Explore the features of the peer-to-peer lending license, including compliance with the RBI, risk mitigation, and data security.
- The lending permit helps the entity to provide an online platform for borrowers and lenders from anywhere in India.
- It restricts and eliminates intermediaries like financial institutions, enabling a direct link between the lenders and borrowers.
- The lending platform uses a secure interface that works on user verification to ensure data security.
- The platforms are regulated by the Reserve Bank of India’s KYC and AML regulations.
- The entity handles the payment process itself or partners with a third-party gateway to disburse and receive funds and interest.
- The registered platforms are only allowed to sell products related to fund borrowing and investing. Non-loan-related insurance is strictly prohibited on the platform.
- The RBI restricts entities engaged in P2P lending from promoting guaranteed returns.
Documents Needed to Apply for RBI P2P License
Check out the documents required to apply for an RBI P2P license:
- Business Plan
- KYC details of all Directors and Shareholders
- Copy of the Company Registration Certificate
- Incorporation documents, namely the Memorandum of Association (MoA)
- Company Charter (Articles of Association - AoA)
- CA-certified Net Worth of the Entity
- Audited Financial Statements of the last three years
- Fit and Proper Certifications for Directors and Promoters
- Details on Technical Infrastructure as mandated by the RBI
- Official Website of the P2P Lending Platform
Criteria for Peer-to-Peer Lending License
The criteria for obtaining a peer-to-peer lending license in India are as follows:
- The business must be registered in India under the Companies Act of 1956 or 2013, either as a private or public limited company.
- A minimum net owned fund (NOF) of INR 2 crore is required. The entity must furnish the KYC of all promoters and provide the source of the said funds.
- The net worth certificate of the entity must be certified by a Chartered Accountant (CA).
- The entity must have a robust website dedicated to P2P lending.
- All directors and promoters must submit a fit and proper declaration, confirming that they are not involved in any legal disputes.
- The entity must establish complete IT infrastructure in accordance with RBI and NBFC regulations.
- As per RBI regulations, a lender cannot lend more than INR 50 lakhs across all P2P platforms. A CA-certified net worth certificate is required after lending more than INR 10 lakhs.
- The platform must not engage in introducing borrowers and lenders through any third-party or affiliate contacts.
- After commencing operations, the P2P lending entity must display a disclaimer on its website indicating the organization’s registration status with the RBI and stating that the RBI is not responsible for any guaranteed loan repayments.
- NBFC-P2Ps must clearly indicate a 100% transparent pricing structure with no hidden charges.
- All transactions must be settled within a 24-hour timeline (T+1 rule mandate).
- The entity must set up an escrow account with a commercial bank to ensure compliance with the RBI’s fund management framework.
Types of Peer-to-Peer Lending in India
The types of peer-to-peer lending in India are as follows:
1. Consumer Lending
Under this category, short-term loans are granted for the purchase of motor vehicles, wedding expenses, house repairs, and electronics purchases.
2. Commercial and Real Estate
Loans are granted for the purchase of commercial and real estate properties and office spaces, including personal mortgages.
3. Small Business Enterprises (SMEs)
Small businesses can obtain credit and loan facilities for business expansion, working capital, and asset financing through a personal guarantee.
Scope of Activities After P2P Lending License
Find out the scope of activities after you obtain a P2P lending license if you’re interested in us so far:
- The entity can only act as an online intermediary for borrowers and lenders.
- Facilitate the services to recover debt settlements.
- Conduct due diligence on all participants in accordance with applicable laws.
- Undertake credit assessment and risk profiling of all borrowers for final disclosure to the lenders.
- Prepare and draft loan agreements and relevant legal documentation.
- Facilitate assistance in loan disbursement and timely repayment.
Activities Prohibited by RBI Post Peer-to-Peer Lending License
Go through the list of activities that cannot be carried out by you after you obtain a peer-to-peer lending license from the RBI:
- A P2P lending platform cannot lend on its own balance sheet or use funds for its own lending operations, as it acts as an intermediary connecting lenders and borrowers.
- The platform cannot raise funds under the Companies Act of 2013 or Section 45 I (bb) of the RBI Act of 1943.
- The entity should neither arrange a credit guarantee or enhancement nor facilitate any secured lending linked to its platform.
- The P2P lending company should not engage in the sale of non-loan-related insurance.
- All types of foreign lending and borrowing are restricted.
- Funds from borrowers and lenders should not be retained on the platform’s balance sheet.
Compliance After Obtaining a NBFC P2P License
The compliance requirements after obtaining a NBFC P2P license are as follows:
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Website Disclosures
We’ll help implement RBI-mandated website disclosures, including license registration details, risk warnings, participant eligibility criteria, fee structure, grievance redressal contact, and restriction of participant matching.
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Monthly Declaration of Portfolios
The entity must disclose portfolio declarations monthly, including non-performing assets and defaulted loan accounts. Our compliance associates can handle this on your behalf.
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Record of Borrowers
A register of borrowers must be maintained, including KYC details, credit scores, and interest rates.
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NOF Maintenance
The entity must maintain a net owned fund (NOF) of INR 2 crore throughout its operation as a peer-to-peer lending platform.
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Filing Disclosures to the RBI
We’ll help submit monthly, quarterly, and annual returns to the RBI within prescribed deadlines.
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KYC-AML Compliance
Our team will ensure timely updates on RBI KYC and AML regulations through employee training and regulatory disclosures.
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Regulation of Lending Limits
The maximum lending limit is INR 50 lakhs per lender across all platforms. A CA-certified certificate is required if the lender exceeds INR 10 lakh.
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Establishment of Grievance Redressal
The entity must establish a grievance redressal mechanism and appoint a nodal officer to handle consumer complaints.
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Information to RBI on Non-Performing Assets
We’ll assist in monthly filing of total non-performing assets and accounts to the Reserve Bank of India.
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Fair Practices Code Policy Implementation
Our legal consultants will help draft a fair practices code per RBI guidelines, with approval from the board of directors.
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IT Framework Per RBI Standards
We’ll help set up secure IT infrastructure to prevent unauthorized access, alterations, and destruction, aligned with the Digital Personal Data Protection Act, 2023.
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Updated Business Continuity Plan
A board-approved business continuity plan must be in place to safeguard lender-borrower information and loan services in case the platform is closed.
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Installation of Information System Audit
We’ll help conduct audits via a CISA-certified external auditor, with reports submitted to the regional RBI office.
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Fit & Proper Compliance Disclosure
The board must approve a “fit and proper” policy for directors. Declarations are reported to the RBI every six months, with an annual statement submitted by March 31.
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Change in Directors
Any changes in directors must be informed to the RBI within 15 days. We’ll ensure filing notifications per the “fit and proper” protocols.
Why Trust DrNBFC for Peer-to-Peer Lending License?
DrNBFC has proved its mettle as one of the leading consulting and compliance management companies for Peer-to-Peer Lending License. From NBFC registration to NBFC due diligence and NBFC AA license, we have got you covered. Want to know why you should partner with DrNBFC for a peer-to-peer lending license? Go through the following key points and start your business journey today:
- Team of 10,000+ professionals, including lawyers, business consultants, CAs, and CS.
- Legal advisory support to help you stay compliant.
- Easy EMI available – avail our services at the best rates with leading banks.
- 40% lower fees than other service providers for license registration.
- 100% money-back guarantee if we don’t deliver as promised.
- Compliance support for 1 year after signing up for peer-to-peer lending services.
- No additional or hidden charges – completely transparent pricing structure.
- Full IT setup for your P2P lending platform by our 200+ tech experts.
- No government visits required – fully remote from the comfort of your home.
- End-to-end support from application filing to year-end annual filing.
Frequently Asked Questions on Peer-to-Peer Lending License
The license is a regulatory certification issued by the Reserve Bank of India, which enables the entity to act as a digital intermediary providing loan facilities between lenders and borrowers.
The initial in-principle approval is valid for 12 months, until you establish your website for operational use. Once the RBI certifies your registration, the license is valid for a lifetime unless it is revoked by the RBI.
The Reserve Bank of India is the primary authority that oversees registration as well as revocation of licenses.
The requirements of the license are as follows:
- Only companies registered with the MCA can apply for an RBI P2P license. LLPs or partnership firms aren’t eligible for the permit.
- A certificate of registration must be obtained from the RBI to operate as an NBFC-P2P.
- The entity must have a minimum net owned fund (NOF) of INR 2 crore.
- All directors and promoters must meet and submit the “fit and proper” criteria, meaning they should have no pending legal issues associated with them.
- The NBFC-P2P must become a member of all four credit information companies (CICs).
T+1 means the funds must be settled within a day (24 hours) as per the Reserve Bank of India mandate.
The list of documents required for securing the license from the RBI is as follows:
- Business plan
- Copy of the company registration certificate
- Audited balance sheets and profit & loss statements
- Memorandum of Association (MoA)
- Articles of Association (AoA)
- Net worth certificate certified by a Chartered Accountant (CA)
- Lease or rental agreement as proof of registered address
- Net Owned Fund (NOF) declaration as required by the RBI
- Source code of the website that will serve as the platform
- Fit and proper status of all directors and promoters
- KYC details of all shareholders and managing directors
The step-by-step procedure for securing the RBI license is as follows:
- Register your company with the MCA.
- Draft mandatory documents, including the Memorandum of Association (MoA) with clauses on NBFC P2P.
- Submit fit and proper declarations of all directors and promoters.
- Apply for the RBI P2P license through the online portal with the necessary documents.
- Answer all queries from the central banking authorities to ensure faster approval.
- Obtain the in-principle approval for 12 months to fulfill all conditions.
- Establish the website and complete any other obligations as required by the authority.
- Receive the certificate of registration.
Crowdfunding is a collab between a group of people towards a collective goal, whereas a peer-to-peer lending platform is a digital platform that provides lending and borrowing services. Crowdfunding is more like fundraising, whereas P2P lending is basically a loan service.
The entity seeking a peer-to-peer lending license must have at least INR 2 crore at the time of application and should maintain the same until the end of the business.
Check the list of responsibilities of a peer-to-peer lending entity as described below:
- Risk and credit assessment.
- Complete disclosure of borrowers.
- Legal documentation, including drafting of loan agreements.
- Recovery of loan services.
- Facilitate loan disbursement and debt settlement.
- Timely annual reporting to the RBI.
- Updating the tech infrastructure in accordance with the latest legislative changes in India.
- Comply with KYC, AML, and CFT regulations of the Reserve Bank of India.
- Conduct proper due diligence of participants and internal systems as per applicable laws and license rules.
Go through the following points to understand the characteristics of P2P lending:
- An online interface that connects lenders and borrowers from any part of India.
- 100% transparency is maintained about the profiles of all participants.
- Tech infrastructure, including secured servers, encryption, and firewalls, is employed to ensure data protection.
- Regulatory compliance and mandatory maintenance of INR 2 crore NOF demonstrate financial stability if there’s economic unrest.
- The entity has a proper and stable system for customer complaints.
Yes, the Reserve Bank of India may cancel your P2P license under the following:
- If you stop operating as a peer-to-peer lending in India.
- Noncompliance with the RBI rules.
- If you’re unable to maintain the required net owned funds (INR 2 crore).
- Your license can also be cancelled if you fail to submit your annual financial reporting.
- If you stop any RBI official from conducting an inspection of your books.
Yes, as per the regulatory requirements, all NBFC-P2P must’ve at least two escrow bank accounts to:
- Receive funds from the lenders;
- Collect repayments from the borrowers.
- What is the minimum leverage ratio that all NBFCp2p entities must maintain?
- The ratio shouldn’t exceed 2, meaning their debt (outstanding loan amount) shouldn’t exceed their capital.
No, you can obtain international funds for setting up/operating an NBFC-P2P entity in India.
The maximum timeline for loan maturity is 36 months, as per the RBI, India.
Yes, a lender with more than INR 10 Lakh of investment must provide a certificate, declaring the same is less than INR 50 lakhs through a CA.
A borrower can avail at least INR 50 Lakhs via a peer-to-peer platform as per the RBI master directions.
