Log in or register
Share on LinkedInShare on LinkedIn

ARTICLE · 27 JULY 2023

Guidelines On Default Loss Guarantee In Digital Lending

JSA Advocates & Solicitors
JSA Advocates & Solicitors
Contributor
JSA Advocates & Solicitors

JSA Advocates & Solicitors

Established in 1991 Our services: JSA is a leading law firm in India with more than 600...

View firm profile
Explore more from JSA Advocates & Solicitors

The Reserve Bank of India ("RBI") issued the 'Guidelines on Default Loss Guarantee in Digital Lending' ("DLG Guidelines") on June 8, 2023, bringing in clarity and permissibility to loss...

IndiaTechnology
Tirthankar Datta
Tirthankar Datta
Ciol Kumar
Ciol Kumar
Author LinkedIn connections

The Reserve Bank of India ("RBI") issued the 'Guidelines on Default Loss Guarantee in Digital Lending' ("DLG Guidelines") on June 8, 2023, bringing in clarity and permissibility to loss sharing arrangements in digital lending which are termed as default loss guarantee ("DLG") or first loss default guarantee ("FLDG").

Background

Prior to the DLG Guidelines, the RBI's digital lending guidelines issued on September 2, 2022 ("Digital Lending Guidelines") require the industry practice of offering financial products with contractual agreements like FLDG, in which a third party guarantees to compensate up to a certain percentage of a default in the loan portfolio of a regulated entity (i.e., banks or non-banking financial companies) ("RE"), to comply with the provisions of "synthetic securitisation" under paragraph 6(c) (of the RBI (Securitisation of Standard Assets) Directions, 2021 ("Securitisation Directions") . Under the Securitisation Directions, REs are

We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.

Register for freeORLog in

Related Articles

Legal Intelligence Newsletters: sign up for the latest legal and regulatory news on your chosen topics

Read more about

Related Comparative Guides

See more popular content from

Article

Use Of Artificial Intelligence (AI) In Courts

On June 3, 2026, the Supreme Court of India’s AI Committee released preliminary draft of the Regulations for Use of Artificial Intelligence (AI) in Courts, 2026 (“The Draft”). This marks a shift from scattered experiments with AI tools for translation, transcription, research and case management. With over 93,000 pending matters as of March 2026, the guidelines aim to ease processes for officials and citizens. AI could help reduce backlogs through automated cause-list preparation, transcription, research, and defect scrutiny, but its use also raises serious concerns.
IndiaTechnology
S.S. Rana & Co.
S.S. Rana & Co.
Article

Fintech In India: An Overview Of The Current Regulatory Landscape

India's fintech market is one of the fastest growing in the world, and it shows no sign of slowing down. Estimates put the market at about USD 145 billion at the end of 2025, growing at a compound annual rate of 30.55% to reach roughly USD 550 billion by 2030. India's fintech adoption rate is around 87%, reportedly the highest anywhere and well above the global average of roughly 64% to 67%. Add the world's second-largest digital population and the runway looks long.
IndiaTechnology
Legitpro Law
Legitpro Law
Article

CERT-In’s New AI-Vulnerability Guidelines: A Quick-Reference For OEMs, Tech Vendors And In-House Counsel

Cybersecurity regulation in India has, until now, largely spoken to the entity that suffers the breach. The 2022 CERT-In Directions issued under Section 70B of the Information Technology Act, 2000 fixed a six-hour reporting clock on the organisation that detects an incident. The new Guidelines flip the lens onto the entity upstream of that breach, the OEM or technology provider that built the product in the first place. For the first time, vendors supplying software, firmware, cloud platforms, or APIs into India carry direct, time-bound, and independently verifiable obligations of their own and not obligations that are merely passed through a customer contract, but obligations CERT-In itself may enforce.
IndiaTechnology
S.S. Rana & Co.
S.S. Rana & Co.
Article

Cybersecurity Is Now A Contract Risk: What India's New Power-Sector Regulations Mean For Technology Vendors

For most technology vendors, cybersecurity has been a promise made to a customer, set out in a statement of work and enforced, if at all, through the contract. For vendors supplying India's power sector, that is changing. The Central Electricity Authority (Cyber Security in Power Sector) Regulations, 2026, notified on 31 July 2026 under the Electricity Act, 2003, impose obligations directly on vendors, alongside a far more demanding set of requirements for the power-sector entities they serve. Most of these provisions come into force on 1 April 2027.
IndiaTechnology
Legitpro Law
Legitpro Law
Article

The Supreme Court Of India Clarifies: Order II Rule 2 Of The Code Of Civil Procedure, 1908 Cannot Be A Ground For Rejection Of Plaint Under Order VII Rule 11(D) Of The Code Of Civil Procedure, 1908

A two judge bench of the Hon’ble Supreme Court of India (“Supreme Court”) in S. Valliammai and Ors. vs. S. Ramanathan and Anr. recently held that Order II Rule 2, Code of Civil Procedure, 1908 (“CPC”) cannot constitute a ground for rejection of plaint under Order VII Rule 11(d) of the CPC. The Supreme Court drew a critical distinction between the two provisions clarifying that while Order II Rule 2 curtails the right to sue for certain claims or reliefs, but it does not bar filing of a suit under Order VII Rule 11(d) of the CPC.
IndiaLitigation, Mediation & Arbitration
JSA Advocates & Solicitors
JSA Advocates & Solicitors
Article

Supreme Court Clarifies That Compromise Decrees Asserting Pre-existing Rights Are Not Subject To Registration Or Payment Of Stamp Duty

In the recent case of Mukesh vs. The State of Madhya Pradesh and Anr., the Hon'ble Supreme Court of India adjudicated on the issue of whether compromise decrees that assert pre-existing rights necessitate registration under the Registration Act, 1908 and are subject to stamp duty under the Indian Stamp Act of 1899.
IndiaLitigation, Mediation & Arbitration
JSA Advocates & Solicitors
JSA Advocates & Solicitors
Article

Services Sector Employment Rules Take Shape: Model Standing Orders, 2026 Under The Industrial Relations Code, 2020

On May 8, 2026, the Ministry of Labour and Employment notified the Model Standing Orders, 2026 (“Model Standing Orders 2026”) under Section 29(1) of the Industrial Relations Code, 2020 (“IR Code”). The notification supersedes the earlier Industrial Employment (Standing Orders) Central Rules, 1946 insofar as they related to model standing orders, and prescribes separate model standing orders for the mining, manufacturing and services sectors.
IndiaEmployment and HR
JSA Advocates & Solicitors
JSA Advocates & Solicitors