The Reserve Bank of India (RBI) has given lenders until the end of November to put systems and processes in place to ensure existing digital loans comply with the regulatory rules issued last month.
Following various complaints of irregularities, the RBI in August issued detailed guidelines that will strengthen scrutiny and monitoring of digital lending programs and lenders involved in them. The central bank has ruled that all digital loans must go directly to borrowers’ accounts, not through a third party. Certain categories, such as joint loans and loans for certain final purposes, are exempt from the new rules. Arrangements whereby non-banks assumed some of the risk of digital loans have effectively ended.
The rules will apply to new and existing customers availing fresh loans, the RBI said in a notification on Friday. (https://bityl.co/EAIM)
The central bank has advised lenders to ensure that service providers and related digital applications comply with the guidelines.