The Reserve Bank of India (RBI) has announced a slew of measures, to put in place strict norms to curb rising malpractices in the digital lending space.
The new RBI digital lending norms came up due to concerns around business conduct and customer protection, amid a rising case of rogue behaviour by digital lending applications. The RBI is now trying to bring in guidelines to regulate the space
The Reserve Bank of India (RBI) has announced a slew of measures, to put in place strict norms to curb rising malpractices in the digital lending space.
All loans disbursed digitally must henceforth be directly credited into the bank accounts of the borrowers, and not through any third party, the RBI mandate states.
These much-awaited guidelines by the RBI on digital lending provides the much-needed clarity on regulatory practices, protection of customer interest, and accountability of stakeholders in digital lending.
“Making various participants in the ecosystem abide by fair practices, the regulator is on the right path to ensure a robust digital lending framework that safeguards the interest of customers in the best possible way,” says Monish Anand, CEO and founder, MyShubhLife, a fintech and lending platform.
Also, digital lending will no longer be a technology-driven convenience model alone. Rather, it would evolve as a multi-layered system thriving on core fundamentals of banking, thereby putting customer interest first, and providing easier access to organised credit with increased transparency.
The new norms on digital lending by RBI will protect borrowers’ interest by ensuring their credit transactions occur through apps that are compliant and transparent in nature.
Adds Anand: “Apps that are legitimate and ensure proper know your customer (KYC) process will help build consumer confidence by preventing end-user losses occurring through fraudulent applications.”
The provision for appointing a nodal grievance redressal officer will also protect borrowers further, and help them raise grievances on an ongoing basis. Data protection of customers will also receive a boost by ensuring that digital lenders provide their customers with options to accept, deny, or consent requests to access their information and restrict it to only specific information required for a loan.
To sum it up, the new RBI norms will ensure an explicit and clear-cut guideline for digital lenders to operate with and safeguard consumers from unscrupulous loan operators or poor industry practices, thus making it secure and sustainable for all stakeholders.