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While issuing the circular on Wednesday, RBI stated that recently, innovative methods of designing and delivery of credit products and their servicing through Digital Lending route have acquired prominence.
The Reserve Bank of India has published guidelines that it intends to enforce for digital lending firms, recommending more transparency and control to customers.
The published RBI regulatory framework is for lending entities that are regulated by the RBI and permitted to carry out lending business
Paying heed to concerns raised by borrowers on digital loans, like the rampant engagement of third parties, mis-selling, breach of data privacy, unfair business conduct, charging of exorbitant interest rates, and unethical recovery practices, the Reserve Bank of India (RBI) has asked all regulated entities (REs) and lending service providers (LSPs) to follow its new guidelines.
The Reserve Bank on Wednesday tightened norms for digital lending to prevent charging of exorbitant interest rates by certain entities and also check unethical loan recovery practices.