RBI forms task force to assess digital loans
The Reserve Bank of India (RBI) announced on Wednesday the establishment of a working group (WG) on digital lending, notably through online platforms and mobile applications. The committee will be responsible for proposing specific regulatory measures in the field of digital credit, among others.
The move is the latest in the central bank’s attempt to tackle on-the-fly lending apps that offer digital lending to underserved customers. In recent times, these platforms have been criticized by the regulator for adopting coercive means of loan collection.
The RBI said that while the penetration of digital methods in the financial industry is a welcome development, there are often rewards and some negative risks associated with such ventures.
“A balanced approach must be followed so that the regulatory framework supports innovation while ensuring data security, confidentiality, confidentiality and consumer protection. The recent surge and popularity of online lending platforms / mobile lending (“digital lending”) applications has raised some serious concerns that have broader systemic implications, ”the regulator said. The group was asked to submit their report within three months.
The WG will be composed of internal and external members. Internal members are RBI Executive Director Jayant Kumar Dash, Chief General Manager (CGM) in charge of oversight department Ajay Kumar Choudhary, and CGM P Vasudevan and Manoranjan Mishra. External members are Vikram Mehta, co-founder of peer-to-peer (P2P) lending platform Monexo Fintech and Rahul Sasi, cybersecurity expert and founder of digital risk monitoring company CloudSEK.
The group will study all aspects of digital lending activities in the regulated financial sector as well as by unregulated players so that an appropriate regulatory approach can be put in place.
It will assess digital lending activities and assess the penetration and standards of outsourced digital lending activities in entities regulated by the RBI. He will also be responsible for identifying the risks posed by unregulated digital lending to financial stability, regulated entities and consumers and suggesting regulatory changes, where appropriate, to promote the orderly growth of digital lending.
In addition, the working group should recommend measures, if any, for the expansion of specific regulatory or statutory perimeters and suggest the role of various regulatory and government agencies. It will also recommend a code of good practice for digital credit players, outsourced or outsourced, and will propose measures for better consumer protection. In addition, recommending measures for strong data governance, data privacy and data security standards for the deployment of digital lending services will be the responsibility of the group.