RBI’s new digital lending rules lay stress on three points: (a) customer protection and conduct (b) technology and data requirements and (c) regulatory framework. Digital lending has taken off in India with the growth of Fintechs and these may need some changes in their business model, as they comply with the new guidelines. For example, the mandated direct transfer of funds between lender and borrower accounts without the medium of an escrow would do away with the need for a third party. Also, RBI has firmly said that storing customer data should be with their consent only. The guidelines also add that digital lending apps cannot access mobile phone resources such as files and media, contact lists, call logs, telephone functions, etc. One-time access can be taken for the camera, microphone, location, or any other facility necessary for the purpose of onboarding/ KYC requirements only, with the explicit consent of the borrower. The crux of Digital Lending was multiple data sources or Big Data to arrive at a decision. Restrictions on Data may affect lending in the short run, but in the long run, would usher in orderly growth and financial stability and protect consumer interests. Moreover, the clear disclosure of all charges and the annual percentage rate would bring in the needed transparency in the sector.
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