Industry

RBI forms working group on digital lending

RBI. File   | Photo Credit: REUTERS

The Reserve Bank of India (RBI) has constituted a working group on digital lending — including online platforms and mobile apps — to study all aspects of digital lending activities in the regulated financial sector as well as by unregulated players.

This is to ensure that an appropriate regulatory approach is put in place.

“Digital lending has the potential to make access to financial products and services more fair, efficient and inclusive. From a peripheral supporting role a few years ago, FinTech-led innovation is now at the core of the design, pricing and delivery of financial products and services,” the RBI said in a notification. “While penetration of digital methods in the financial sector is a welcome development, the benefits and certain downside risks are often interwoven in such endeavours,” the RBI said.

“A balanced approach needs to be followed so that the regulatory framework supports innovation while ensuring data security, privacy, confidentiality and consumer protection,” banking regulator added.

The working group consists of both internal and external members. The internal members include Jayant Kumar Dash, Executive Director, RBI (Chairman); Ajay Kumar Choudhary, Chief General Manager in-charge, Department of Supervision, RBI; S.P. Vasudevan, Chief General Manager, Department of Payment and Settlement Systems, RBI; and Manoranjan Mishra, Chief General Manager, Department of Regulation, RBI (Member Secretary).

The external members are Vikram Mehta, co-founder, Monexo Fintech; and Rahul Sasi, cyber security expert and founder of CloudSEK.

The working group will evaluate digital lending activities and assess the penetration and standards of outsourced digital lending activities in RBI regulated entities; identify the risks posed by unregulated digital lending to financial stability, regulated entities and consumers; and suggest regulatory changes to promote orderly growth of digital lending.

It will also recommend measures for expansion of specific regulatory or statutory perimeter and suggest the role of various regulatory and government agencies. It will also recommend a robust fair practices code for digital lending players.

The group will submit its report within three months.


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Printable version | Jan 29, 2022 6:42:01 AM | https://www.thehindu.com/business/Industry/rbi-forms-working-group-on-digital-lending/article33570891.ece

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