The Reserve Bank of India (RBI) has given lenders till the end of November to implement appropriate systems and processes to ensure that new and existing loans comply with the digital loan rules issued last month.
The RBI’s move follows several reports highlighting issues of customers facing violence and abuse from agents of digital loan apps in the country. As we have reported, in some cases, users have committed suicide because they could not cope with the psychological burden given by the threat actors.
Based on the recommendations of a working group formed in 2021, the guidelines outline who can lend to borrowers in the country, all data lenders can access, and expanding disclosure requirements to provide more customer transparency and control.
The RBI said on Friday that the guidelines will apply to existing customers availing fresh loans and new customers coming onboard.
The central bank has given all regulated firms licensed by the regulator till November 30 to ensure that existing digital loans also comply with the new rules “in both letter and spirit”.
“These orders are issued under Sections 21, 35A and 56 of the Banking Regulation Act, 1949, Sections 45JA, 45L and 45M of the Reserve Bank of India Act, 1934, Sections 30A and 32 of the National Housing Bank Act, 1987. 6 of the Factoring Regulation Act, 2011 and Section 11 of the Credit Information Companies (Regulation) Act, 2005,” RBI said in its letter to non-banking financial institutions including all commercial and cooperative banks and housing finance companies.