Online Lending in India will soon have to follow new guidelines. RBI Governor Shaktikanta Das today said, the central bank would release rules to control digital lending over the coming weeks.
The governor of the RBI highlighted that the reserve bank has exercised prudence because the situation with digital lending has taken longer than anticipated and is more complicated than first thought.
“It has taken more time than we had initially presumed, but the situation is so complex, you know, we are being very careful and very cautious. On one hand, we have to support innovation, on the other, we have to maintain financial stability,” Das said.
Das reiterated the RBI’s stance on the issue of digital lending, saying that it was its duty to guarantee financial stability. He continued by saying that the RBI anticipates licenced businesses to function within the parameters of their permits.
The RBI governor noted, “If they want to do something over and above that, they need to seek permission from us [RBI]. If they are building anything beyond what their licence permits, then it is not acceptable. We cannot allow a scenario where risk is building up.”
Online Lending Standards for both licensed and unlicensed soon – RBI Governor
Das stated that the working committee charged with developing the standards for digital lending is now trying to resolve issues involving both licenced and unlicensed firms entering the market without the necessary permits.
As the fintech sector waits for the digital lending guidelines, this is the second regulatory update from the RBI in as many months. The $270 million digital lending market is expected to be impacted by the regulations.
The RBI established a working group last January to study the problems with the digital lending ecosystem and suggest regulations accordingly. By November 2021, the working group suggested stricter guidelines for digital lending players.
These guidelines include asking digital lending apps to undergo a verification process by a nodal agency, and the setting up of a self-regulatory organisation covering the participants in the digital lending ecosystem.