Online lending is going to crack down on digital lending platforms and mobile apps in minutes. In fact, the working group constituted by the Reserve Bank of India (RBI) has made some recommendations, after the implementation of which the difficulties of such platforms may increase. These are the platforms from where the loan amount is available on very easy terms, but after that the lenders start doing their own thing. Arbitrarily charged interest and loan amount. The difficulties of such lenders will increase in the coming days.
What is the recommendation: The RBI Working Group in its report has recommended that the bank accounts of digital borrowers should be exempted directly. Apart from this, loans should be disbursed only through the bank accounts of digital lenders. RBI’s working group has suggested that data collection should be allowed only with verifiable audit trails with prior and explicit consent of borrowers. In addition, all data must be stored in servers located in India.
Documentation of the algorithmic features used in digital loans has also been recommended to ensure necessary transparency. At the same time, each digital lender is recommended to provide a key fact statement in a standardized format including the annual percentage rate. It is also going to prepare a standardized code of conduct for recovery in consultation with RBI.
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Let us inform that on January 13, 2021, RBI had constituted a working group on digital loans, including lending through online platforms and mobile apps. According to RBI, the opinion of the general public will be taken before taking a final opinion on the recommendations and suggestions made by the working group.