RBI to set up regulatory framework to make taking loans safer
RBI plans to set up a regulatory framework for digital lending apps or loan web aggregators to make taking of loans more consumer centric and transparent. The RBI governor, as part of the announcement today after the monetary policy review, said that concerns regarding the functioning of loan web aggregators and loan products that harm customers have come to its notice. Therefore, it proposes to set up a regulatory framework to enhance customer centricity and safety for customers.
As per the statement issued, «The Reserve Bank had accepted, vide its Press Release dated August 10, 2022, the recommendation of the Working Group on Digital Lending (Chairman: Shri Jayant Kumar Dash) to come up with a regulatory framework for web-aggregators of loan products (WALP). WALP entails aggregation of loan offers from multiple lenders on an electronic platform which enables the borrowers to compare and choose the best available option to avail loan from one of the available lenders. Based on the recommendation of the Working Group, it has been decided to bring such loan aggregation services offered by the Lending Service Providers (LSPs) under a comprehensive regulatory framework. The framework will focus on enhancing the transparency in the operations of WALPs, increase customer centricity and enable the borrowers to make informed choices. The detailed guidelines will be issued separately.»
The new announcement comes after RBI, in September 2022, issued guidelines on protecting borrowers. As per the guidelines issued last year, lenders were required to inform customers about the cost of taking the loan. Lenders are now required to issue a Key-Fact Statement to the borrower
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