new Delhi: The Reserve Bank of India (RBI) on Wednesday (13 January) set up a Working Group to suggest regulatory measures to boost the gradual growth of digital lending. The move was taken by the central bank amid rising incidents of harassment related to online lending.
It added, “The recent popularity and popularity of online lending platforms / mobile lending apps (‘digital lending’) has caused some serious concerns, which have widespread systemic implications.”
An RBI statement said that a Working Group (WG) is being formed to study all aspects of digital lending activities in the regulated financial sector so that appropriate regulatory approaches can be put in place.
The group, headed by RBI executive director Jayant Kumar Dash, will comprise both internal and external members and will submit its report within three months. Other internal members are Ajay Kumar Choudhary (CGM-in-Charge, Department of Supervision, RBI), P Vasudevan (CGM, Department of Payment and Settlement Systems), and Manjranjan Mishra (CGM, Regulation Department).
The external members are Vikram Mehta (co-founder, Monexo Fintech) and Rahul Sasi (cyber security expert and founder of CloudSEK).
“While the entry of digital methods into the financial sector is a welcome development, the benefits and some downside risks are often associated in such efforts. A balanced approach needs to be followed to ensure that the regulatory framework while ensuring data security, privacy, confidentiality Support innovation. And consumer protection, “the RBI statement said.
It further noted that digital lending has the potential to make financial products and services more fair, efficient and inclusive.. From a peripheral supporting role a few years ago, fintech-led innovation is now at the core of the design, pricing and distribution of financial products and services.
As per the Terms of Reference (ToR) for the WG, it has been asked to evaluate digital lending activities and to assess the penetration and standards of outsourced digital lending activities. RBI regulated institutions, And “Identifying the risks posed by unregulated digital debt to financial stability, regulated entities and consumers”.
The panel has also been asked to suggest regulatory changes, if any, to promote the gradual development of digital lending.. It consists of recommending measures for the expansion of specific regulatory or statutory perimeters, and suggesting the roles of various regulatory and government agencies.
The panel will also recommend a strong fair practice code and enhanced consumer protection measures for digital lending players.
Last month, the central bank warned the public not to fall prey to the increasing number of unauthorized digital lending platforms and mobile apps, “reports about individuals / small businesses due to the increasing number of unauthorized digital lending platforms Is. Mobile app on the promise of getting a loan in a quick and hassle free way. “
(With agency inputs)