Digital lending rules designed to end regulatory arbitrage, protect customers: RBI DG M Rajeshwar Rao

MUMBAI: Reserve Bank of India deputy governor M Rajeshwar Rao on Thursday said the recently released digital lending norms are designed to end regulatory arbitrage and protect customers. Speaking at an event organised by industry body Assocham, Rao said there was unbridled engagement of third parties, misselling, breach of data privacy, unethical recovery practices and exorbitant interest rates recently which led the RBI to regulate the activities.
On August 10, RBI came out with digital lending norms after extensive consultations and last week asked the industry to implement those by November this year.
Some players in the fintech industry have expressed concerns that the norms on lending will impact their operations.
“The framework is designed to strike a balance between the need for an innovative and inclusive system while at the same time ensuring that the regulatory arbitrage is not exploited to the detriment to the customer’s interest,” Rao said.
He added that the norms put the onus squarely on the regulated entities on behalf of whom the apps do the lending.
“… they will have to ensure that the loan service facilitator and the digital lending apps with whom they have outsourcing tie ups, function within the regulatory ecosystem not just in letter but also in spirit,” the Deputy Governor said.
He said going forward, the passage of a recommended legislation banning lending by unauthorised entities and creation of a self regulatory organisation for the digital lenders will help the industry.
The DG said digital lending has an important role to play in India’s growth especially by supporting cash flow-based lending to small businesses.
The regulatory challenge is to ensure that innovation continues in the industry, and at the same time ensure that customer’s interest is not compromised, Rao said.
Rao said deepening credit is the bedrock of financial inclusion and termed access to formal credit as a force multiplier.
Having achieved successes on bank accounts – where 78 per cent of adults have a bank account now, as against 53 per cent in 2014 – we need to ensure that people take adequate credit now, which will enhance the quality of financial inclusion.
In the absence of formal credit, people have to depend on the unsustainable informal credit or personal equity, he said.

Source link

Leave a Comment

Adani Group Companies Return रश्मिका मंदाना की ये कातिल अदाएं Rashmika Mandana Fitness Mantra रश्मिका मंदाना खुद को कैसे रखती है फिट रश्मिका अपनी डाइट में फल और नारियल पानी को जरूर शामिल करती हैं