RBI Penalises Innofin Solutions and NDX P2P Rs3.91 Crore for NBFC-P2P Lending Violations
Moneylife Digital Team 26 August 2024
Reserve Bank of India (RBI) has imposed a penalty of Rs3.91 crore on two non-banking financial companies (NBFCs), Innofin Solutions Pvt Ltd and NDX P2P Pvt Ltd, for violating various rules and regulations set by the banking regulator.
 
Innofin Solutions, also known as LenDen Club and NDX P2P, also known as LiquiLoans, were fined Rs1.99 crore and Rs1.92 crore, respectively, for non-compliance with certain provisions of the NBFC - peer-to-peer lending platform RBI directions, 2017 and guidelines on digital lending.
 
During the statutory inspection, RBI found several issues with Innofin Solutions. The company did not provide the necessary personal details, such as credit assessments and risk profiles of borrowers, to prospective lenders. It also disbursed loans without obtaining specific approval from individual lenders. Additionally, Innofin Solutions routed the disbursed and collected amounts through a co-lending escrow account on the P2P platform, violating the established Fund Transfer Mechanism. Furthermore, repayments for merchant finance loans were routed through the nodal account of a third party, which acted as a lending service provider for the company.
 
Similarly, NDX P2P was penalised as the NBFC failed to disclose required personal details, including credit assessments and risk profiles of borrowers, to prospective lenders. It disbursed loans without obtaining specific approval from individual lenders and routed both disbursed and collected loan amounts through a co-lending escrow account, violating the established fund transfer mechanism. Additionally, repayments for merchant finance loans were routed through a nodal account of a third party that was acting as a lending service provider. The NBFC also took on partial credit risk by waiving the service fee partially or fully, which was not permitted under the regulations for NBFC-P2P companies.
 
After considering the reply and oral submissions of all banks during the personal hearing, RBI concluded that non-compliance with its directions was substantiated and warranted the imposition of a monetary penalty.
 
RBI said the penalty is based on deficiencies in regulatory compliance and is not intended to be pronounced on the validity of any transaction or agreement they entered into with their customers.
Comments
Free Helpline
Legal Credit
Feedback