RBI Plans Repository Of Digital Lending Apps To Help Customers Stay Away From Dubious Entities
Reserve Bank proposes to create a public repository of DLAs deployed by its regulated entities.
The decision assumed significance considering RBI had expressed significant concerns over the rapid growth of digital lending apps.
The Reserve Bank of India on Thursday proposed to create a public repository of digital lending apps deployed by its regulated entities to address the problems arising from unauthorised platforms.
This move aims to check the problems arising from mushrooming unauthorised players in the segment.
Announcing the third bi-monthly monetary policy for the current financial year, RBI Governor Shaktikanta Das said the RBI has taken several measures for the orderly development of the digital lending ecosystem in India.
Why Public Repository of Digital Lending Apps?
- Public Repository: The RBI aims to create a centralised database of approved lending platforms.
- Regulatory Oversight: This repository will require RBI-regulated financial institutions to provide and maintain details of their digital lending applications.
- Consumer Protection: The initiative is designed to help consumers differentiate between legitimate and potentially harmful lending apps.
“As a further measure in this direction and to address the problems arising from unauthorised digital lending apps (DLAs), the Reserve Bank proposes to create a public repository of DLAs deployed by its regulated entities. The regulated entities (REs) will report and update information about their DLAs in this repository. This measure will help the consumers to identify the unauthorised lending apps,” Das announced.
Safeguarding Users, But Challenges Remain
Ashwini Kumar Tewari, MD, State Bank of India (SBI), noted that the introduction of a public list of digital lending apps will safeguard users.
“The ongoing issue of new apps appearing daily makes it challenging for consumers to determine their legitimacy,” he said.
Tewari said that while the whitelisting of apps is an important step, further work is needed to address apps not included in the repository and to prevent unauthorised apps from operating.
Background and Context
The latest announcement includes the guidelines on digital lending and the first loss default guarantee issued by RBI in September 2022 and June 2023 respectively.
On September 2, 2022, RBI issued comprehensive guidelines on digital lending. These guidelines aim to address various concerns such as customer protection, data privacy, interest rates, recovery practices, and the issue of mis-selling.
The decision assumed significance considering RBI had expressed significant concerns over the rapid growth of digital lending apps.
RBI kept key lending rates unchanged at 6.5% in its first monetary policy after the budget.
