Digital lending norms will protect customers

Mumbai: Reserve Bank of India (RBI) 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 function within the regulatory ecosystem," he said.