Digital Lending: Decoding The RBI Guidelines

Background

Here is the playbook: First comes the business, the regulator follows the suit. We saw this play in the P2P lending space. And, it's playing now again. Looks like after sandboxing the digital lending, the Reserve Bank of India (“RBI”) is on top of it to set the rules of the game. Else, the foul play would, undoubtedly, be abound.

While digital lending has been there for a while, the RBI never really attempted to define the term until recently. Perhaps, as we write this, there are structures, models and approaches which are being evolved so as to ease the process involved in digital lending –, In January 2021, to understand the lay of the land of the digital lending, the RBI commissioned a working group to swot up the digital lending space. In November, 2021, the working group jotted down a blue print to the RBI for framing the regulations. Finally, on August 10, 2022, the RBI took the first step through a press release to provide an implementation