New Delhi, November 18 : .The government wants to tighten controls on digital lending platforms and apps for mobile phones that have exploded in India over the last few months.
They operate in an unregulated environment which raises serious concerns about consumer protection. The Reserve Bank of India (RBI), a working group, has proposed a variety of steps to regulate digital lending.
These include a separate legislation that would prevent the illegal use of digital loans and the creation of an agency to verify dig.
According to sources, the government and financial regulator are in agreement about the importance of properly regulating digital lending.Many of the Working Group’s recommendations may be included in the legislation or processes that will soon be put into place.
In its report, the RBI Working Group recommended that digital loan disbarment should go directly to the accounts of borrowers.
Disbursement of and servicing loans should only be made through the accounts of digital lenders.
The group suggested, in an attempt to safeguard consumer data that all data be collected only after prior consent from borrowers and with audit trails.
All data must be kept on servers in India.
To ensure transparency, it was also suggested that digital lenders should document any algorithmic elements used.
Each digital lender must provide an overview in standardised formats, including the Annual Percentage rate.
A Code of Conduct should also be established by the SRO to regulate unsolicited commercial communication for digital loans.
The proposed SRO will also have to maintain a “negative list” of Lending Service Providers.In consultation with RBI, the SRO will create a uniform code of conduct in recovery.
On January 13th, 2021, the RBI established the Working Group on Digital Lending, which included lending via online platforms as well as mobile apps.Jayant Kumar Dash (Executive Director of RBI), was the chairman.
This was done in response to customer protection and business concerns that arose from the rapid growth of digital lending.
For comments from stakeholders and the general public, the Report was posted to the RBI website.
According to the RBI, the RBI stated that comments would be reviewed before a decision is made on whether or not the WG has implemented its recommendations.
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