The Peer to Peer Lending Rules enable the operation of Peer to Peer lending platforms in Mauritius by P2P Operators which hold Peer to Peer Lending Licences issued by the FSC. The Peer to Peer Lending Rules apply to Peer to Peer Operators licensed by the FSC and came into force on 15 August 2020.
The P2P Lending Rules provide for a sound and efficient regulatory environment to support the offer and execution of Peer to Peer (“P2P”) Lending for the benefit of stakeholders in the non-bank financial services sector of Mauritius. Under these Rules, a Peer to Peer operator will facilitate access to finance by matching borrowers and lenders on its online platform.
The P2P lending Rules is part of the broader spectrum that the FSC is working on for consolidating the regulatory framework for Fintech in Mauritius. Operators in the non-bank financial services sector can now leverage on P2P networks for offering equivalent and sound alternatives to promote access to credit and raise capital.
What is Peer to Peer Lending?
P2P lending is the practice of lending money to individuals or businesses through online services that match lenders with borrowers. Peer to Peer lending companies often offer their services online and attempt to operate with lower overhead and provide their services more cheaply than traditional financial institutions. As a result, lenders can earn higher returns compared to savings and investment products offered by banks, while borrowers can borrow money at lower interest rates, even after the P2P lending company has taken a fee for providing the match-making platform and credit checking the borrower.
As indicated below, there are specific limits which apply to lenders and borrowers whenever they transact through P2P Operators:
|Borrower who is a natural person||Maximum aggregate of MUR 1 million with a minimum of MUR 50,000|
|Borrower who is a legal person||Maximum aggregate of MUR 3 million with a minimum of MUR 50,000|
|Lender who is a natural person||Maximum aggregate of MUR 1.5 million|
|Lender who is a legal person||Maximum aggregate of MUR 3 million|
(MUR 40 = USD 1)
It is to be noted that these lending limits will not apply to sophisticated investors who lend through P2P Operators to borrowers who are not resident in Mauritius and when the lending occurs in any other currency. Furthermore, the reimbursement period for the lending through Peer to Peer Lending platforms must not exceed 84 months. For completeness, a Peer to Peer Lending platform is an online portal or electronic platform that facilitates the offering, execution or issuance of funds between prospective lenders and borrowers.
Requirements and Obligations
The Rules provide for a minimum cap of MUR 2 million in relation to the unimpaired stated capital that shall typically have to be met by licensed P2P Operators with the FSC.
In order to ensure adequate accountability and decision making, P2P Operators shall be managed by a board of directors consisting of a minimum of three directors, one of whom shall be a resident and independent director in Mauritius. Furthermore, a licensed P2P Operator would need to be a participant of a credit information bureau in Mauritius. This includes the Mauritius Credit Information Bureau (MCIB) which has been set up by the Bank of Mauritius. This specific requirement underscores the statutory need of the FSC to ensure that financial stability be maintained regarding the conduct of business by P2P Operators in Mauritius.
A P2P Operator shall also be required to establish an office and appropriate Information Technology infrastructure in Mauritius. The Rules further provide for the preservation of the integrity and privacy of lenders’ and borrowers’ information which are hosted on the P2P platforms of licensed P2P Operators, in conformity with the Data Protection Act of Mauritius.
The P2P Operator, as a licensee under Section 14 of the Mauritian Financial Services Act 2007, will be subject to the obligations and responsibilities for setting up procedures and controls to counter money laundering and terrorist financing, in accordance with the provisions of the FSC Code on the Prevention of Money Laundering and Terrorist Financing, which inter-alia includes the appointment of a Money Laundering Reporting Officer.
A P2P Operator will be expected by the FSC to adopt and maintain adequate internal control policies and procedures which are not limited to the sound management of possible conflicts of interests and handling of complaints by its borrowers and lenders. Banks, as defined under the Banking Act 2004 in Mauritius, would finally not be allowed to be a shareholder of a licensed P2P Operator unless prior approval is obtained from the FSC. The same approach would, in principle, be applied by the FSC to similar requests for shareholding in a licensed P2P operator, by foreign-established banks.