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ARTICLE · 01 JULY 2020

Engaging With Digital Lending Platforms – Stricter Compliances For Banks And NBFCs

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On 24 June 2020, the Reserve Bank of India (RBI) issued directions on "Loans Sourced by Banks and NBFCs over Digital Lending Platforms: Adherence to Fair Practices Code and Outsourcing Guidelines"...

IndiaTechnology
Sanjay Khan Nagra
Sanjay Khan Nagra
Smita Jha
Smita Jha
Prashanth Ramdas
Prashanth Ramdas
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On 24 June 2020, the Reserve Bank of India (RBI) issued directions on "Loans Sourced by Banks and NBFCs over Digital Lending Platforms: Adherence to Fair Practices Code and Outsourcing Guidelines" (Directions) to scheduled commercial banks (Banks) and non-banking financial companies (NBFCs) in relation to their engagement with digital lending platforms for disbursement of loans to borrowers.

The Directions have been issued primarily to reiterate requirements relating to compliance with the existing regulatory framework for outsourcing of services and the fair practices code by Banks and NBFCs (both traditional NBFCs utilising brick and mortar channels for credit delivery, and NBFCs registered to operate as 'digital-only' lending entities). According to the RBI, the need for these Directions has arisen on account of an increase in complaints received by the RBI against the lending platforms. Such complaints primarily relate to exorbitant interest rates,

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