As the RBI scales up the requirements for P2P non-bank lending platforms – the industry is gearing up for a request to change rules and clarification.

P2P lending companies are expressing concern about the new regulation that seeks to compel lenders and borrowers to clear any amounts held in the escrow accounts within a single day (T+1). Critics in the microstructure literature claim that this rule is very restrictive and advocate a lengthening of the settlement period to, at most, T+2 or T+3.

The RBI’s new directive is in this regard to ensure that the money with lenders is not locked in the platform for too long. But often P2P platforms operate with the argument that investing the funds within a single day is quite hard. The T+1 procedure is sentimentalized because it is impossible to deploy funds immediately; time is required for reconciliation and the identification of cash flows, noted the Association of P2P Lending Platforms member. ‘Based on the factors stated regarding reconciliation and other operation issues we intend to come up with T+2 or T+3 to the RBI’.

The association is at the moment collecting responses from its personnel and intends to present this plan to the RBI latest by the weekend time.

Announced by the RBI on Friday, the notification says: “The funds transferred into the escrow accounts of borrowers and lenders shall not remain in these accounts for a period exceeding ‘T+1’ where T is the date of receipt of these funds in such escrow accounts. ”

It is here that the financial gurus opine that the RBI wants to safeguard the interest of lenders and make a point that the funds staked for the repayment tenor, must be returned to the lender as soon as the borrower repays. It is considered great news to lenders because it decreases the average amount of time it takes for them to get their money back.

At present, the P2P lending market in India is reckoned to be anywhere between Rs 7,000-8,000 crore, with approximately 20 P2P Lending companies licensed with the RBI as NBFCs. Some of the income sources for these platforms are; registration fees, processing fees as well and collection of repayments.

Under the newly laid down legislation, P2P platforms are required to give out past data. A senior official of P2P lending platform admissions said, “We will be seeking how the proposed guidelines of RBI want to see this data.

While analyzing the new rules, it is significant to refer to the opinion of experts by which it is possible to state that rules are developed aiming to stop P2P platforms from acting as virtual deposit-taking organizations and offering liquidity, reinvestment, and implicitly guaranteeing interest rates.

Presently it is prohibited for a lender to invest in a single platform above Rs 50 lakh. Also, the maximum limit of investment for a particular borrower is Rs fifty thousand and the overall credit limit that a borrower can avail at a time cannot exceed Rs ten lakhs. An important condition concerning the rate of the offered credits is that it is possible to obtain it with the maximal maturity of 36 months.