RBI Slaps Penalties On Faircent, Finzy, Other NBFCs For Non-Compliances

The Reserve Bank of India (RBI) has imposed a cumulative monetary penalty of INR 76.60 Lakh on four non-banking financial company peer-to-peer (NBFC-P2P) lending platforms – Faircent, LEO1, Finzy and Rang De.

While Rang De and Finzy have been penalised INR 10 Lakh each, LEO1’s parent Visionary Financepeer Pvt Ltd has been fined INR 16.60 Lakh. The biggest penalty of INR 40 Lakh has been imposed on Faircent.

The platforms have been penalised over non-compliance with certain provisions of the NBFC-P2P directions, 2017. 

The RBI, which initiated scrutiny of the affairs of these companies in September 2023, found multiple issues with their operations. The details are as mentioned below: 

• Faircent: The RBI issued the monetary penalty order to the NBFC on February 11, 2025 after finding out that the company disbursed loans without specific approvals from individual lenders. Besides, it also found out that the NBFC did not undertake and disclose credit assessment and risk profile of the borrowers to the prospective lenders.  Further, Faircent also took partial credit risk by foregoing the management fee partially / fully, which was not provided under the ‘Scope of Activities’ for NBFC-P2P companies. It also did not comply with the RBI’s directions on ‘Fund Transfer Mechanism’, when it allowed repayments to lenders from fresh funds provided by new / existing lenders or through repayments pooled from the borrowers.

• LEO1: The NBFC was penalised by the RBI on February 25 over alleged loan disbursals to borrowers without specific approval of individual lenders along with no signed loan agreements in place. The central bank said that it did not disclose borrowers’ details to lenders, had no board-approved policy in place for services, among others. 
• Finzy: The RBI said that Finzy disbursed loans to borrowers without specific approval from individual lenders. Besides, the central bank found certain instances where agreements with service providers missed the inclusion of clauses to recognise the right of the RBI to cause an inspection to be made to the service providers and undertake an annual review of the service providers.
• Rang De: The NBFC was penalised for disbursing loans to individual borrowers without the specific approval of individual lenders. 

“This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company,” the RBI’s orders read. 

This is the second instance when the RBI has imposed such penalties on NBFC-P2P lending platforms in recent times. In August, it imposed penalties totalling around INR 4 Cr on LenDen Club and LiquiLoans.

In the same month last year, the apex bank also tightened norms to curb certain practices adopted by NBFC-P2P platforms such as violation of the prescribed funds transfer mechanism, promoting P2P lending as an investment product with features like tenure-linked assured minimum returns, among others. 

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