INDIA Law and Practice Contributed by: Shilpa Mankar Ahluwalia, Himanshu Malhotra and Purva Anand, Shardul Amarchand Mangaldas & Co
Full-KYC PPIs are issued by banks and non- banks after completing KYC of the PPI holder. These PPIs can be used for the purchase of goods and services, fund transfers or cash with - drawals.
regulated online marketplace for P2P lending. To offer such services, eligible entities are required to obtain registration with the RBI as an NBFC– P2P lending platform, subject to a few identified exceptions. P2P Platforms also came under sharp regulatory scrutiny in the last year, with the RBI express - ing concerns regarding some business models where P2P Platforms performed quasi-lending and banking functions instead of acting as an intermediary. These entities facilitate online sale and purchase transactions primarily on e-commerce platforms, without requiring e-commerce merchants to cre - ate a separate payment integration system. Pay - ment aggregators (PAs) receive payments from customers, and pool and transfer them to the merchants after a period of time. Payment gateways Payment gateways (PGs) are entities that pro - vide technology infrastructure to route/facilitate processing of online payment transactions, with - out handling any funds. PAs and PGs are governed by the RBI’s regula - tory framework (PA/PG Guidelines) requiring PAs to be licensed by the RBI, while prescribing rec - ommended technical standards for PGs. Payment aggregators – cross-border Payment Intermediaries Payment aggregators The RBI has brought all entities facilitating cross- border payment transactions for the import and export of goods and services (PA-CB) under its direct regulation. All PA-CBs, except authorised dealer category-1 banks (AD Banks), will need to take prior approval of the RBI for facilitating pay - ments involving the import and export of goods
Digital Lending Digital lenders
In India, banks and NBFCs alike have moved to digital platforms for credit products, particularly to cater to relatively underbanked sectors such as micro, small and medium-sized enterprises (MSME) and retail clients. Digital lending is under the regulatory purview of the RBI. The Digital Lending Guidelines dated 2 September 2022 (DL Guidelines) prescribes the regulatory framework for the digital lending eco - system in India. The DL Guidelines apply to both REs and the lending service providers or digital lending plat - forms that enter into partnership arrangements with REs to provide digital lending products to consumers. The DL Guidelines prescribe guardrails in con - nection with the kinds of customer data that can be accessed and stored by lending service pro - viders, the consent architecture that must be in place for the collection and storage of such cus - tomer data and detailed disclosure requirements to protect customer interest and prevent mis- selling of credit products. DL Guidelines also provide for indirect regulation of lending service providers through regulated lending institutions. P2P lending platforms Online P2P lending platforms are governed by the RBI and offer loan facilitation services between lenders registered on the platform and prospective borrowers – ie, they constitute a
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