Signing out of account, Standby…
With regulated digital platforms, more informed and smarter decisions could be made about getting digital credit
Borrowing a collateral-free personal loan or a salary loan has become feasible and comparatively faster with the increasing prominence of digital lending apps in India. Although the decision remains with the borrowers to protect themselves from fraud or unethical practices caused which is caused due to fintech ecosystem being unregulated by the government.
Fintech has not only been spurring financial inclusions but also has been operating unfairly by charging high-interest rates, immoral recovery procedures, data privacy violations, unethical practices and mis-selling. A recent report by the Reserve Bank of India (RBI) indicated that as of February 2021, 600 out of 1,100 lending apps operational in India are illegal.
This called out the need for RBI’s interference in the online financial market. The recently released rules for digital lending aim to achieve transparency in the lending space as well as secure the interests of consumers. Below are the details mentioned, what they are, and how to protect your finances when you take a loan.
Who do the new RBI guidelines apply to?
The RBI has categorized digital lenders into the following:
The first category of authorized lenders is the ones to which these latest digital lending guidelines will be applicable. These are also known as Regulated Entities (REs) and the Lending Service Providers (LSPs) who are involved with and engaged by them.
Decoding RBI’s Digital Lending rules
Below are the guidelines that are classified under five sections for a better understanding:
Simplified process of availing loan
Offer complete information about the cost of borrowing
Saving the interests of the customers
Addressing the complaints of customer
Protecting the data of customers
In addition, according to RBI’s regulatory framework for digital lending applications, they will now have to report all lending activities, deferred payments and short-term credit to credit information companies regardless of their nature or tenure.
Dos and don’ts for borrowers to follow
With these digital lending norms in place, trusting and borrowing credit from digital applications has become possible. Here are key practices to follow for a safer experience.
With these regulated digital platforms, more informed and smarter decisions could be made about getting digital credit. These new RBI recommendations could help prevent digital lending scams and frauds by fraudsters. It would bring due diligence on the working of NBFCs or banks. Further, these safeguarding tools will connect legitimate digital lenders to the customers for quality services with hassle-free and affordable experience.
Athalia Monae
Gurpreet Kaur
Amy M Chambers
Copyright © 2022 Entrepreneur Media, Inc. All rights reserved.
Entrepreneur® and its related marks are registered trademarks of Entrepreneur Media Inc.
Successfully copied link