RBI has announced guidelines for digital loans. As per the guidelines, the digital loan should be credited directly to the borrower’s account. This amount should not be deposited through a third party. Fees or charges for the loan should be paid by the lending institution and not by the borrower. As per the new guidelines, the lending company cannot increase the credit limit without the borrower’s approval. It may be mentioned that RBI constituted a special working group on January 13, 2021, to prepare guidelines for digital loans.
After a long wait, the Reserve Bank of India (RBI) has released the much-talked-about digital lending guidelines. These guidelines have been issued based on the norm that only firms regulated by the Reserve Bank or authorized under other laws can carry on lending business. These new guidelines have been introduced to curb the growing malpractices and illegal activities.
The Reserve Bank has classified digital lenders into three groups. Firms under the regulation of the Reserve Bank which are permitted to carry on lending business, firms that have been granted permission to carry on lending business by a regulatory body other than the Reserve Bank, and firms which are lending outside the regulatory norms.
The guidelines issued by the Reserve Bank are mainly for the firms under its regulation. For firms authorized to do credit business by a regulatory body other than the Reserve Bank which will frame norms by that regulatory body and for firms lending outside of regulatory norms, special legislation or central intervention will be required to prevent any type of malpractice. .