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The Reserve Bank of India (RBI) has imposed monetary penalties on Innofin Solutions Private Limited (“LenDen Club”) and NDX P2P Private Limited (“LiquiLoans”) for non-compliance with the Non-Banking Financial Company – Peer to Peer Lending Platform Directions, 2017 and the RBI Guidelines on Digital Lending.
LenDen Club has been fined ₹1.995 crore for regulatory lapses, including:
Non-disclosure of required borrower information such as credit assessment and risk profiles to prospective lenders.
Disbursing loans without specific approval from individual lenders.
Routing loan disbursal and collection through a co-lending escrow account in violation of the prescribed fund transfer mechanism.
Allowing repayments in Merchant Finance Loans to be routed via the nodal account of a third-party Lending Service Provider.
LiquiLoans has been fined ₹1.92 crore for similar non-compliances, with additional charges including partial credit risk assumption by foregoing service fees not permitted under NBFC-P2P regulations.
RBI conducted a supervisory scrutiny of both companies in June 2023. Following examination of their responses, additional submissions, and personal hearings, RBI concluded that the charges of non-compliance were substantiated, warranting the imposition of penalties.
The penalties reflect RBI’s focus on ensuring regulatory compliance, transparency, and protection of lenders and borrowers in the P2P lending ecosystem. RBI emphasized that these actions are based strictly on regulatory deficiencies and are not intended to affect the validity of any transactions between the companies and their customers.
The imposition of monetary penalties is without prejudice to any other action that RBI may initiate against the companies.
[RBI]