The Reserve Bank of India (RBI) has announced stringent new guidelines aimed at curbing malpractices and protecting investor interests. The fresh regulations, effective immediately, prohibit P2P platforms from assuming credit risks, offering credit enhancements, or guarantees. This directive ensures that lenders bear the entire loss of principal, interest, or both in transactions.
By sidestepping traditional banking channels, these platforms connect individual lenders directly with borrowers. However, under the new framework, these platforms are also restricted from cross-selling insurance products related to credit enhancements or guarantees. Additionally, P2P platforms cannot promote their services as investment products and must disclose all potential losses that lenders might incur on both principal and interest.
