E-lenders laud RBI’s proposal on digi-lending

MUMBAI: The recommendations made by the RBI working group on digital lending, including lending through online platforms and mobile apps, will promote orderly growth of sector, industry players said.

In a comprehensive report, the Working Group constituted by the RBI has made several recommendations, including a separate legislation to prevent illegal digital lending activities, subjecting digital lending apps to a verification process by a nodal agency and establishing a self-regulatory organisation (SRO) covering the participants in the digital lending ecosystem.

Emkay Global Financial Services in a note said the proposals appear to be largely constructive for the digital lending space and are on expected lines.

That said, the introduction of regulations may moderate the growth rate of digi-loans, which have seen strong growth in a short term in countries like China and India (P2P), it said.

“However, the regulations would facilitate orderly growth in long run, similar to MFIs post 2010. As of now, most buy-nowpay-later credit is onboarded on bank/ NBFC books,” it added.

Commenting on the recommendations, V Swaminathan, CEO of Andromeda and Apnapaisa, said that given the pace of expansion of digital lending, safeguarding the interest of consumers has now become most important task for the authorities and industry players.

The RBI Working Group has rightly made a case for separate legislation to prevent illegal digital lending activities and a SRO covering the participants in the digital lending ecosystem, he said. “It has to be ensured that consumers do not lose faith in the players in the digital lending space. The Working Group has made important suggestions for growth of the sector,” he said.

Welcoming the recommendations, the Fintech Association for Consumer Empowerment (FACE) said SRO is the call of the hour.