Recorded RBI impact
Monetary penalty
Monetary penalty · Fresh imposition
Published by RBI
23 Aug 2024
Case Brief
RBI imposed a monetary penalty of Rs 1,92,00,000 on NDX P2P Private Limited (LiquiLoans) by order dated August 21, 2024. The penalty was for non-compliance with the Non-Banking Financial Company - Peer to Peer Lending Platform (Reserve Bank) Directions, 2017 and the Guidelines on Digital Lending. After scrutiny conducted in June 2023, RBI issued a show-cause notice and, after considering the company’s reply and submissions, found several violations sustained, including non-disclosure of required borrower details, disbursal of loans without specific lender approval, routing of funds through a co-lending escrow account contrary to the fund transfer mechanism, allowing repayments through a third party’s nodal account, and taking partial credit risk by foregoing service fees beyond the permitted scope for NBFC-P2P entities. RBI stated that the action is based on regulatory deficiencies and is without prejudice to any other action that may be initiated.
Why RBI Acted
RBI imposed a monetary penalty after supervisory scrutiny found the company had not complied with certain RBI directions. The sustained charges included failing to disclose required borrower personal details, credit assessment and risk profile to prospective lenders; disbursing loans without specific approval of individual lenders; routing disbursals and collections through a co-lending escrow account in violation of the prescribed fund transfer mechanism; allowing Merchant Finance Loan repayments to be routed through a third-party Lending Service Provider’s nodal account; and taking partial credit risk by foregoing service fees, which was outside the permitted scope for NBFC-P2P companies. The penalty was imposed under section 58G(1)(b) read with section 58B(5)(aa) of the RBI Act, 1934.
Operating Impact
The company must absorb the monetary penalty and remain exposed to further supervisory or enforcement action for the same or related compliance deficiencies. The release does not impose a new operational restriction, but it signals continued RBI scrutiny of the company’s P2P lending and digital lending practices.
Regulatory Basis
- clause (b) of sub-section (1) of section 58G read with clause (aa) of sub-section (5) of section 58B of the Reserve Bank of India Act, 1934
Action Facts
- Primary Impact
- Monetary penalty
- Order Date
- 21 Aug 2024
- Effective From
- 21 Aug 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- NBFC
Related Entities
Entities similar to NDX P2P Private Limited