Review of Master Direction - Non-Banking Financial Company – Peer to Peer Lending Platform (Reserve Bank) Directions, 2017

Current Context: On 16th August 2024, The Reserve Bank of India (RBI) has updated the Master Direction for Non-Banking Financial Company – Peer to Peer Lending Platform (NBFC-P2P) Directions, 2017.

Here are the updated directions for NBFC-P2P platforms, including the limits:

Escrow Accounts: All transactions must be routed through escrow accounts to ensure transparency and compliance. Cash transactions are strictly prohibited.
Credit Risk: NBFC-P2P platforms cannot provide or arrange any credit enhancement or guarantee. They must not assume any credit risk from transactions on their platforms. Lenders must bear any loss of principal or interest, with clear disclosures provided to them.
Exposure Limits:

Lender Exposure: A single lender’s exposure to all borrowers across all P2P platforms is capped at Rs.50 lakh.
Borrower Exposure: A single borrower can borrow a maximum of Rs.10 lakh across all P2P platforms.
Platform Exposure: The exposure of a single lender to a single borrower on a specific platform is limited to Rs.50,000.

Compliance: The RBI has tightened compliance measures to address violations where platforms were promoting peer-to-peer lending as an investment product with assured returns, providing liquidity options, and acting like deposit takers.
Implementation: Most of the updated provisions are effective immediately, with some specific items coming into effect 90 days from the date of the circular.
These updates aim to ensure that NBFC-P2P platforms operate within a clear regulatory framework, promoting transparency and protecting the interests of all participants involved.

Question:

1 As per Master Direction - Non-Banking Financial Company – Peer to Peer Lending Platform (Reserve Bank) Directions, 2017, What is the maximum amount a single borrower can borrow across all P2P platforms?