RBI penalises LiquiLoans operator NDX P2P over lending rules

What the Record Shows

By an order dated 21 August 2024, the Reserve Bank of India imposed a monetary penalty of Rs 1,92,00,000 (about Rs 1.92 crore) on NDX P2P Private Limited, the company that operates the LiquiLoans peer-to-peer lending platform. The RBI's Enforcement Department announced the action, and the penalty was levied under Section 58G(1)(b) read with Section 58B(5)(aa) of the Reserve Bank of India Act, 1934.

The penalty was imposed for non-compliance with the Non-Banking Financial Company - Peer to Peer Lending Platform (Reserve Bank) Directions, 2017 and the Guidelines on Digital Lending. Per the order, the action followed an RBI scrutiny of the company carried out with reference to its position in June 2023.

No individual was named in the order; the action was taken against NDX P2P as the regulated entity operating the platform. The RBI reproduced its standard caveat, that the 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". This is a compliance penalty, not a ruling on any loan made through the platform. The order was passed the same day as a companion penalty on Innofin Solutions Private Limited, which runs LenDenClub, and the two share most of their sustained charges.

How It Worked

A peer-to-peer platform is required to be a risk-neutral marketplace. The 2017 Directions oblige it to give prospective lenders the borrower information they need, to lend only where an individual lender has approved a specific borrower, to keep lenders' money in a segregated escrow, and, critically, not to take on credit risk itself. Per the order, the RBI found that NDX P2P departed from each of these on the way to the penalty.

The RBI found that the company failed to disclose to prospective lenders the borrower personal details, credit assessment and risk profile the Directions require, and that loans were disbursed without the specific approval of individual lenders. On the movement of money, the RBI found that disbursed and collected amounts were routed through a "co-lending escrow account" in violation of the laid-down Fund Transfer Mechanism, and that repayments in Merchant Finance Loans were allowed through the nodal account of a third party acting as the platform's Lending Service Provider.

The charge that sets this order apart from its companion is the fifth. Per the order, the RBI found that the platform "took partial credit risk by foregoing the service fee partially/ fully, which was not provided under the scope of activities for NBFC-P2P". In plain terms, when loans went bad the platform absorbed part of the pain by waiving its own fee. That is a marketplace stepping into the credit risk it is legally required to leave entirely with the lenders. The economics of a platform that quietly cushions defaults are close to those of a first-loss guarantee, even though the RBI framed the finding through the P2P scope-of-activities rule rather than the default-loss-guarantee framework.

Procedurally, the order was not summary. The charges the RBI describes as sustained are those that were pressed after its scrutiny; RBI penalty orders of this kind follow a show-cause notice, the company's reply and a personal hearing. The penalty of Rs 1,92,00,000 was the outcome.

Who Lost Money

The RBI made no finding that any lender lost money, and nothing here should be read as saying they did. The penalty is a compliance sanction on the company, and the RBI's caveat is explicit that it does not pronounce upon the validity of any transaction between the platform and its customers.

What the order describes is a set of practices that stripped away protections retail lenders are entitled to. Lenders on the LiquiLoans platform, including those who came in through partner wealth and neobank distribution channels, were, per the RBI's findings, not given the borrower disclosures the Directions require and had loans disbursed without their loan-level approval. The fee-waiver finding cuts the other way on risk: by absorbing part of the loss, the platform may have masked the true default experience that lenders were exposed to, which is precisely why a P2P is meant to stay risk-neutral and transparent.

The Rs 1.92 crore penalty is paid by the company to the RBI. It is a sanction, not compensation to lenders, and any question of returns or recoveries on individual loans made through the platform is separate from this enforcement action.

Where It Stands Now

As of the current record, the RBI's order of 21 August 2024 stands and the Rs 1,92,00,000 penalty was imposed as described. The action is a completed enforcement order rather than an ongoing restriction: the RBI did not bar the platform from operating, and the sanction is monetary. An RBI penalty order of this kind can ordinarily be challenged before the appropriate appellate forum, and the current position should be read from the RBI's own record.

Because the order turns on compliance with the P2P Directions and the Digital Lending Guidelines rather than on any criminal allegation, there is no criminal prosecution and no conviction associated with it. The RBI's finding is one of regulatory non-compliance, and its caveat that it does not rule on the validity of underlying transactions continues to frame how the order should be understood. The parallel penalty on LenDenClub's operator the same day signals that the RBI was scrutinising a pattern across the P2P sector, not a single platform.

What It Means

For a retail lender, the LiquiLoans order clarifies what the P2P model is and is not. It is a marketplace where you choose the borrower, see the risk, and keep the return and the loss; it is not a product where the platform silently backstops defaults. When the RBI penalises a platform for taking on credit risk by waiving fees, the lesson is to be wary of any P2P pitch that implies your downside is cushioned. If defaults are being absorbed somewhere, the risk has not vanished, it has just been obscured.

The practical checks follow from the rules the RBI enforced: confirm you are shown borrower-level credit information, that you are approving individual loans rather than a pooled allocation, and that your money sits in the prescribed segregated escrow. P2P lending carries genuine credit risk and is not a substitute for an insured deposit, so it helps to model what a headline return actually means on your outlay with a lump-sum returns calculator and to size any allocation to what you can afford to lose. The Oquilia enforcement archive tracks these actions, including the companion penalty on LenDenClub's operator and the four NBFCs barred over pricing.

FAQ

What exactly did the RBI penalise LiquiLoans's operator for?

The RBI imposed a Rs 1,92,00,000 penalty on NDX P2P Private Limited, which runs LiquiLoans, for non-compliance with the 2017 Peer to Peer Lending Platform Directions and the Guidelines on Digital Lending. Per the order dated 21 August 2024, the sustained charges included borrower non-disclosure, disbursal without individual lender approval, routing of funds outside the prescribed escrow, and taking partial credit risk by waiving its fee.

Why does the fee-waiver charge matter?

An NBFC-P2P is required to be risk-neutral and must not take on credit risk itself. Per the order, the RBI found the platform took partial credit risk by foregoing its service fee partially or fully when loans went bad, which is outside the permitted scope of activities. Absorbing defaults this way can obscure the true risk lenders are exposed to.

Does the penalty mean lenders lost their money?

No. The RBI's order is a compliance penalty on the company. The RBI stated the action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement between the company and its customers. It made no finding that lenders lost money.

Did the RBI find anyone guilty of a criminal offence?

No. This is a regulatory penalty by the RBI under the RBI Act, not a criminal case. There is no criminal prosecution or conviction associated with the order. The RBI's finding is one of regulatory non-compliance by the company.

Is this connected to the LenDenClub penalty?

They are separate orders against separate companies, both dated 21 August 2024. The RBI penalised NDX P2P (LiquiLoans) and, in a companion order, Innofin Solutions (LenDenClub). The two share most sustained charges, and the LiquiLoans order carries the additional credit-risk finding.

Where can I read the official order?

The RBI's press release recording the penalty on NDX P2P Private Limited, with the order dated 21 August 2024, is published on rbi.org.in and is linked below.

This report is based on the RBI press release imposing a monetary penalty on NDX P2P Private Limited, order dated 21 August 2024, reviewed on 31 July 2026.