RBI mulls allowing P2P firms to diversify risks by entering secured lending

There has been exponential growth in P2P lending in recent years

The Reserve Bank of India (RBI) is weighing the possibility of allowing peer-to-peer (P2P) platforms to foray into secured lending. This is to en­able them to diversify the risks emanating from having a completely unsecured book with relatively new-to-credit custo­mers who have been outside the reach of legacy credit vendors.

According to the broad contours of the mechanism that has figured in talks between the banking regulator and P2P players, transactions and fund movement will be through an escrow account. The asset is to be hypothecated in the name of a trustee; in the case of a lea­se, the same will