Note on Non-Banking Finance Company-P2P

1. INTRODUCTION

 NBFC-P2P is a new class of NBFC, for non-banking institutions which carry on the business of Peer-to-Peer Lending. In October 2017, Reserve Bank of India (RBI) released a set of guidelines to regulate the expanding peer to peer lending space in India.

 

P2P Lending, is the practice of borrowing and lending money through an online marketplace.

1. NBFC:

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013 engaged in the business of loans and advances, acquisition of shares / stocks / bonds / debentures / securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property. A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments by way of contributions or in any other manner, is also a non- banking financial company (Residuary non-banking company).

ON THE NATURE OF THEIR ACTIVITY:

 

SPECIFIC CATEGORY

 

1. NBFC-MFI
2. NBFC-IDF
3. NBFC-IFC
4. NBFC-P2P
5. NBFC-AA
6. NBFC-HFC
7. NBFC-FACTOR

 HOW DOES NBFC- P2P LENDING WORK?

 

P2P lending platforms connect borrowers and lenders, similar to how Uber connects riders and drivers or Flipkart connects buyers and sellers. The platforms manage both the supply (investors) and the demand (borrowers). The supply side is responsible for handling the investors and onboarding partners, who bring in the investors. The demand side works with loan/vendor partners or even borrowers directly

 

Eligibility Criteria to Register as a NBFC-P2P Platform

 

The eligibility criteria specified for registration as an NBFC P2P platform are – 

 

• Only NBFCs are permitted to engage in peer-to-peer lending activities. The regulation ensures that P2P lending platforms are operated by licensed financial entities, providing a level of security and oversight for borrowers and lenders participating in the lending process;
• All NBFCs, regardless of whether they are starting or already operating as P2P lending platforms, must obtain a Certificate of Registration (CoR) from the RBI;
• To seek registration with the RBI, an NBFC-P2P must have a minimum net owned fund of 2 crore rupees;
• The RBI has set strict criteria for companies seeking registration, requiring them to be incorporated in India with a strong IT system;
• Additionally, the management must demonstrate a commitment to acting in the public interest and the directors and promoters must meet suitability standards set by the RBI;

1. SCOPE OF WORK FOR NBFC LICENSE:

 

1. Preparation of documents Affidavits, Declaration, Resolutions, and all other supporting documents with respect to Application to Reserve Bank of India.
2. Provide guidance on the applicable laws, regulations, and timelines for obtaining the NBFC-P2P license.
3. Preparation of Projects, Profiles, documentations and to do submissions before Hon’ble RBI Authority.
4. Details of the board of directors, promoters, and key managerial personnel, including “Fit and Proper” declarations.

− KYC documents of promoters and directors.

− Proof of compliance with NOF requirements.

− Risk management policy and IT framework.

1. Ensure all documents are complete, accurate, and in line with RBI’s prescribed format.
2. Filing of Application for NBFC-P2P License with RBI in accordance with the RBI Rules & Regulations;
3. To guide for documentations and take follow-ups with Hon’ble RBI Authority.

• Act as the point of contact between the applicant and RBI.
• Respond to RBI queries or requests for additional information in a timely manner.
• Attend meetings, if required, with RBI officials to provide clarifications or defend the application.

1. To do preparation and take care of interview before Hon’ble RBI Authority.
2. Representation before RBI till obtaining Certificate.

Follow up with various officers such as Field Officer, Sub-Regional Officer, Regional Officer, Member Secretary, and Board Members of the Consent Appraisal Committee, preparing technical letter, providing draft reply, presenting the case.

1. PLACE OF RENDERING SERVICES:

The place of rendering services generally shall be our office situated at Office No. 106, Sr. No. 55, Sukhniwas, Mangalwar Peth, Pune – 411011, Maharashtra, India.

1. TERMS AND CONDITIONS:

• Assigner shall nominate specific person(s) for co-ordination and shall provide relevant data support in concern assignment Mr. Pramod Ladda and Aadarsh Singh will be assigned person.
• All the payments should be made in the name of “Ladda Bhutada & Associates”.
• All the disputes shall be subject to Pune Jurisdiction
• Termination of this contract requires 30 days’ notice.
• Payment Terms- 60% advance along with Work Order, 40% after submission of Application for appeal.
• GST- Extra as Applicable

 

Kindly sign a copy of the letter/ or mail me at info@csladda.com in token of approval or you may issue separate letter accepting terms and condition of this letter.

 

In case of any explanation /information needed, please feel free to contact us. Thanking you and assuring best professional services

 

SD/-

PRAMODKUMAR R. LADDA

COMPANY SECRETARY & INSOLVENCY PROFESSIONAL