RBI Imposes Rs76.60 Lakh Penalty on 4 NBFCs for Violating P2P Lending Regulations

Moneylife Digital Team 10 March 2025

Investor Interest

Reserve Bank of India (RBI) has imposed a penalty of Rs76.60 lakh on four non-banking financial companies (NBFCs) for non-compliance with provisions of the NBFC Peer-to-peer (P2P) Lending Platform Directions, 2017. The highest penalty of Rs40 lakh was imposed on Fairassets Technologies India Pvt Ltd (Faircent).

The other NBFCs penalised by RBI include: Visionary Financepeer Pvt Ltd, Bridge Fintech Solutions Pvt Ltd (Finzy) and Rang De P2P Financial Services Ltd (Rang De).

Faircent was penalised for multiple regulatory violations. The NBFC disbursed loans without obtaining the specific approval of individual lenders. It also failed to conduct and disclose proper credit assessments and risk profiles of borrowers to prospective lenders.

Faircent took on partial credit risk by partially or fully waiving its management fee, which is not permitted under the 'scope of activities' for NBFC-P2P companies. Furthermore, it did not comply with RBI's directions on the 'fund transfer mechanism'. Specifically, the company allowed repayments to lenders to come from fresh funds provided by new or existing lenders or pooled repayments from borrowers rather than ensuring repayments were made directly from a specific borrower to a particular lender.

Visionary Financepeer was fined Rs16.60 lakh for several regulatory violations. The NBFC disbursed loans to individual borrowers without obtaining the specific approval of individual lenders and failed to ensure that both lenders and borrowers signed loan agreements. Additionally, Visionary Financepeer did not disclose the required borrower details to lenders, nor did it have a Board-approved policy for pricing the services it offered.

In some instances, Visionary Financepeer failed to include clauses in its agreements with service providers to recognise RBI's right to inspect these service providers. It also neglected to conduct an annual review of these service providers. Furthermore, Visionary Financepeer took on partial credit risk, which is prohibited under the 'Scope of Activities' for NBFC-P2P companies.

Finzy was fined Rs10 lakh for similar violations. The NBFC disbursed loans without obtaining the specific approval of individual lenders and took partial credit risk, which is not allowed under the 'scope of activities' for NBFC-P2P companies.

Additionally, Finzy failed to ensure that its agreements with service providers included clauses recognising RBI's right to inspect these providers. It also did not conduct annual reviews of service providers and neglected to periodically review its compliance with the Fair Practices Code and the functioning of its grievance redressal mechanism.

Rang De was also penalised Rs10 lakh for disbursing loans without obtaining the specific approval of individual lenders.

In all four cases, RBI clarified that the penalties were based on deficiencies in regulatory compliance and were not intended to comment on the validity of any transaction or agreement the companies entered into with their customers.

Comments

User

Meenal Mamdani

2 months ago

RBI wants to show how vigilant it is by going after companies that follow all the laws like Rang De.

It had the auto reinvest feature on the platform until December 2023 but which was removed subsequent to that date.

Does it not make more sense to highlight ONLY THOSE NBFCs THAT HAVE NOT ADOPTED THE RBI GUIDELINES EVEN AFTER THEY WERE POINTED OUT BY RBI?

RBI IS SO DESPERATE TO RESTORE ITS IMAGE THAT EVEN THOSE WHO HAVE MADE THE CORRECTIONS AS ADVISED BY RBI, STILL ARE FEATURED AS BEING PENALIZED?