Moneycontrol PRO
Register Now : CA Business Leaders 40Under40 Awards registration is LIVE
you are here: HomeNewsBusiness

RBI to roll out digital lending norms soon, says Governor Shaktikanta Das

The RBI had set up a working group in January 2021 to study issues surrounding digital lending apps and suggest regulations. The group was set up as concerns arose over business conduct and customer protection amid a spurt in digital lending.

June 17, 2022 / 12:54 PM IST

The Reserve Bank of India (RBI) will “shortly” put out guidelines to regulate digital lending, the central bank governor said on June 17, while condemning the unruly behaviour of loan recovery agents in regulated and non-regulated entities.

“The recommendation of the RBI-working group on digital lending are in very advanced stage of examination and the guidelines will be issued very shortly,” Shaktikanta Das said at an event in Mumbai.

The RBI had set up a working group in January 2021 to study issues surrounding digital lending apps and suggest regulations.

In November 2021, the working group proposed stricter norms for digital lenders, including subjecting digital lending apps to a verification process by a nodal agency to be set up in consultation with stakeholders, and the setting up of a self-regulatory organisation covering the participants in the digital lending ecosystem. The RBI is yet to finalise these guidelines.

The group was set up as concerns arose over business conduct and customer protection amid a spurt in digital lending. The group had recommended separate legislation to prevent illegal digital lending activities. It also mooted the development of certain baseline technology standards and compliance with those standards as a pre-condition for those offering digital lending solutions.

In the context of customer service, another issue grabbing the RBI’s attention is harsh recovery measures used by certain lenders without having adequate checks and controls over their recovery agents, Das said today.

The central bank has received complaints of customers being contacted by recovery agents at odd hours, even past midnight. There are also complaints of recovery agents using foul language. Such kinds of activities by recovery agents are "unacceptable" and pose "reputational risk" for the financial entities themselves, the governor added.

“The RBI will address this issue very seriously as far as our supervised and regulated entities are concerned,” Das said.

The RBI is in touch with banks and shadow lenders and has sensitised them to this issue, he added.
Moneycontrol News
first published: Jun 17, 2022 12:54 pm