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P2P License

Overview of P2P License

  1. A P2P Lending license in India is the Certificate of Registration (COR) given to NBFCs to start a P2P Landing platform. The COR is part of the directions issued in NBFC- Peer to Peer Lending Platform Rules, 2017. As per the directions, once the applicant NBFC has obtained the certificate, it starts to be known as an NBFC-P2P Lending platform.
  2. Peer to Peer lending (P2P lending) is one of the methods of obtaining finances for your business. P2P functions as an online platform offering ease of access, flexibility and choice of lending and borrowing for lenders and borrowers. P2P model aggregates lenders and borrowers, facilitates the matching of lenders with borrowers.
  3. Lenders can get earn interest higher than from bank savings, while the borrowers can obtain funds at an interest rate lower than banks.

What is P2P License for P2P License in India

  • The P2P lending model is based on the crowd-funding model. Most of the P2P lending platforms are organised as NBFC (Non-Banking Financial Companies) fintech companies. Unlike traditional banking and financial institutions, the P2P model is a modern credit model to meet current business credit needs. A few P2P platforms offering services include Faircent, Paisadukaan, Finzy, Rupeecircle, and so on.
  • The P2P lending offers a platform for aggregation of all types of savings from individuals, high net worth , Hindu Undivided Families and other non-banking institutions. Under the P2P business model, an auction is conducted where the lender can make a bid for a borrower’s loan requirements and the borrower can either accept or reject the bid. Further, the platform can offer services such as credit assessment, recovering loans, and so on. The platform generally co-ordinates the transaction between the lender and the borrower.

Eligibility criteria for P2P License in India

  1. Following is the eligibility criteria for procuring an NBFC P2P License:
  2. A Peer to Peer (P2P) lending platform can only be allocated by registered organizations and active Non-Banking Financial Companies (NBFCs)
  3. An entity should secure a minimum NOF (Net Owned Fund) of worth Rs. 2 crores to avail the COR (Certificate of Registration) for P2P lending business;
  4. If an organization was already involved with such business before the Certificate of Registration was made obligatory. The organization shall fulfil all necessities as drafted by the RBI (Reserve Bank of India).

Documents required to obtain an P2P License

The license applicant of Peer to Peer lending in India must attach the following documents with the P2P license application:

  1. Certificate of incorporation
  2. Memorandum of Association
  3. Articles of Association
  4. Audited the Balance Sheet of the company
  5. Net Worth Certificate of the Company
  6. Feasible business plan
  7. A declaration that directors adhere to the “Fit and Proper” Criteria
  8. Website source code

FAQs About P2P License?

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