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RBI panel moots law to regulate digital lending

  • Posted By
    10Pointer
  • Categories
    Economy
  • Published
    20th Nov, 2021

A Reserve Bank of India (RBI) Working Group (WG) on digital lending, including lending through online platforms and mobile apps has submitted its recommendations.

Context

A Reserve Bank of India (RBI) Working Group (WG) on digital lending, including lending through online platforms and mobile apps has submitted its recommendations.

Key recommendations by RBI

  • A separate legislation should be enacted to oversee such lending.
  • Setup a nodal agency to vet the Digital Lending Apps.
  • A Self-Regulatory Organisation should be set up for participants in the digital lending ecosystem.
  • Develop certain baseline technology standards and compliance with those standards as a pre-condition for offering digital lending solutions.
  • Disbursement of loans should be made directly into the bank accounts of borrowers and servicing of loans should be done only through the bank accounts of the digital lenders.
  • All data collection must require the prior consent of borrowers and come ‘with verifiable audit trails’ and the data itself ought to be stored locally. 

What is Digital Lending?

  • Digital lending is the process of availing credit online.
  • Its increased popularity amongst new-age lenders can be attributed to expanding smartphone penetration, credit range flexibility, and speedy online transactions.

Benefits of digital lending

  • potential to make access to financial products and services more fair, efficient and inclusive
  • mostly preferred by those who are generally not able to avail any credit through the formal sources of finance, like banks

Verifying, please be patient.

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