RBI issues detailed set of guidelines for digital lending

Reserve Bank of India has said that digital loans must be credited directly to the bank accounts of borrowers and not through any third party. RBI also said that digital lending entities and not the borrowers should pay fees or charges payable to Lending Service Providers in the credit intermediation process. Issuing a detailed set of guidelines for digital lending, the RBI mentioned concerns primarily related to unbridled engagement of third parties, mis-selling, breach of data privacy, unfair business conduct, charging of exorbitant interest rates, and unethical recovery practices.

RBI had constituted a Working Group on ‘digital lending including lending through online



platforms and mobile apps’ - WGDL on January 13, 2021. The report submitted by the WGDL was placed on the RBI website, inviting comments of stakeholders and members of the public. 

Taking into account the inputs received from a diverse set of stakeholders, a regulatory framework to support orderly growth of credit delivery through digital lending methods while mitigating the regulatory concerns has been firmed up. This regulatory framework is based on the principle that lending business can be carried out only by entities that are either regulated by the Reserve Bank or entities permitted to do so under any other law.