RBI imposes monetary penalty on NDX P2P Private Limited (‘LiquiLoans’)

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.