Embedded below is the consultation paper crafted by the Reserve Bank of India (RBI) in anticipation of creating a regulatory regime for peer to peer lending. The document sets out to review the various legal frameworks in place around the world for peer to peer lending, along with investment crowdfunding. Why is this important? India happens to be home to the 7th largest economy in the world and the 2nd most populous. India has much room to grow, IF they get their economic policies right.
The authors state that one of the benefits of P2P lending is;
“…the main advantages of P2P lending for borrowers has been lower rates than those offered by money lenders/unorganized sector and the advantages for lenders are higher returns than what conventional investment opportunities offer.”
India may be described as an “underbanked” country. Recently the RBI has been licensing new “Small Finance Banks,” Of course India is a country that is quickly becoming a connected society as smartphone utilization is marching higher. As of 2015, over 350 million users were said to be online. As internet access grows, it is natural for all aspects of finance to take place on a connected device – not at a corner brick and mortar storefront.
The RBI is accepting feedback from the peer to peer [marketplace] lending industry now. The deadline for comments is May 31, 2016. The “contours” of the regulations will be created in concert with the Securities and Exchange Board of India (SEBI).