RBI sets up panel on digital lending

After warning borrowers on availing loans from unregulated digital lending websites and mobile apps last month, the Reserve Bank of India (RBI) on Wednesday announced that it is forming a working group (WG) to study all aspects of digital lending activities in the regulated financial sector as well as by unregulated players so that an appropriate regulatory approach could be put in place.

The group has to evaluate digital lending activities and assess the penetration and standards of outsourced digital lending activities in RBI regulated entities, identify risks posed by unregulated digital lending to financial stability, regulated entities and consumers, suggest regulatory changes to promote orderly growth of digital lending, recommend measures for expansion of specific regulatory or statutory perimeter and suggest the role of various regulatory and government agencies, recommend a robust fair practices code for digital lending players, insourced or outsourced, suggest measures for enhanced consumer protection; and recommend measures for robust data governance, data privacy and data security standards for deployment of digital lending services.

The group has to submit its report within three months.

Recently there were several incidents where borrowers committed suicides due to harassment from the recovery agents of these digital lending platforms.

The working group will consist of both internal and external members and will be chaired by Jayant Kumar Dash, executive director, RBI.

The external members of the panel are Vikram Mehta, co-founder, Monexo Fintech and Rahul Sasi, cyber security expert and founder of CloudSEK.