The Reserve Bank of India (RBI) has tightened the rules for digital medium lending companies. The central bank has instructed banks, non-banking finance companies (NBFCs) and digital lending platforms to provide all types of information related to loans on its website through mobile apps and other digital channels. The central bank has taken this step to make digital lending more transparent. The central bank had received complaints that some digital lending companies were charging too much interest from customers. Apart from this, the central bank had received a complaint of recovery against some companies in a very strict manner. After this, these guidelines have been issued by the central bank.
Guidelines have been given to banks and non-banking financial companies to make their agents’ names public on the website. At the same time, digital lending platforms have been instructed to inform their customers about which banks or NBFCs are distributing loans.
In a letter sent to scheduled commercial banks and NBFCs, the RBI said, “If banks / NBFCs outsource any activity, it does not reduce their liability.” This is because they have full responsibility for complying with the regulatory directives. RBI further stated that soon after the loan is approved, the borrower should issue a letter on the letterhead of the bank or NBFC.