To address issues coming from unlawful platforms, the Reserve Bank of India suggested establishing a free library of digital lending applications used by its regulated companies.
This action seeks to control the issues brought on by the segment’s growing number of unauthorized participants.
Governor of the Reserve Bank of India Shaktikanta Das announced the third bi-monthly monetary policy for the current fiscal year. She stated that the RBI has taken several steps to ensure the orderly growth of the digital lending ecosystem in India.
Public Database of Apps for Digital Lending
“To further address the issues caused by illegal digital lending applications (DLAs) and as a step forward, the Reserve Bank suggests establishing a public database of DLAs used by its regulated businesses. Information regarding their DLAs will be reported and updated in this repository by the regulated enterprises (REs). Das said, “This measure will assist consumers in identifying unauthorised lending apps.”
Key Points:
- Public Repository: The RBI wants to compile a list of lending platforms that have been authorized in one place.
- Regulatory Oversight: To access this repository, financial institutions under RBI regulation must submit and keep up-to-date information on their applications for digital loans.
- Protection of Consumers: The program aims to assist users in distinguishing between safe and possibly hazardous loan applications.
The rules for digital lending and the first loss default guarantee, which the RBI will release in September 2022 and June 2023, respectively, are included in the most recent statement. The RBI expressed serious worries about the fast rise of digital lending apps, therefore the decision took on significance.
