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ARTICLE · 03 DECEMBER 2024

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RBI Guidelines On Default Loss Guarantee (DLG) In Digital Lending

AK & Partners
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The RBI has framed a comprehensive infrastructure of regulatory stepping stones for default loss guarantee in digital lending through 'Guidelines on Default Loss Guarantee in Digital Lending' issued on June 8, 2023.

IndiaTechnology
Kritika Krishnamurthy
Kritika Krishnamurthy

The Reserve Bank of India ("RBI") has framed a comprehensive infrastructure of regulatory stepping stones for default loss guarantee in digital lending through 'Guidelines on Default Loss Guarantee in Digital Lending'1 ("DLG Guidelines") issued on June 8, 2023. It is notable that RBI's digital lending guidelines issued on September 2, 2022, preceded the DLG Guidelines and regularised the outsourcing arrangements entered by Regulated Entities (REs) with a Lending Service Provider ("LSP")/ Digital Lending App ("DLA")2.

At present, the contractual arrangements between REs and LSPs or between two REs involving default loss guarantee (DLG), commonly known as First Loss Default Guarantee ("FLDG") are subject to the DLG Guidelines.

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