P2P lending startups planning an association for fair practice code

RBI official guidelines to regulate peer-to-peer lending startups are expected by October end. But before that happens, P2P companies may come with an association to create a fair practice code within the industry players and grapple with ethical issues together, according to an ETtech report.

Reportedly, P2P firms are in the process of forming an association tentatively called the Alternate Finance and P2P Lenders Association that will be registered in Chennai by the end of this month, according to Shankar Vaddadi, founder of Hyderabad-based i-lend.

“We will establish a fair practice code so that there is no misrepresentation,” Vaddadi told ET. “Since the industry is in its infancy, we will establish guidelines for disclosure, ethics and so on.” Some of the founding members include the likes of Faircent, i-lend, LoanMeet, Lend-Box, Monexo, among others.

The association is expected to be the common platform where common problems could be addressed and also a medium of learning about peer-to-peer lending.

But not everyone is convinced with the idea. Speaking to the publication, Sanjay Swamy, managing partner at Prime Ventures, a fund that focuses on fintech startups said, “Having an association is good, and it sort of goes with the whole peer-to-peer concept.” “But the growth of this sector depends on the RBI guidelines. If the final guidelines are as progressive as their initial draft, this industry could shape very quickly,” he added.