A Reserve Bank of India (RBI) Working Group (WG) on digital lending, including lending through online platforms and mobile apps, has recommended a separate legislation to oversee such lending as well as a nodal agency to vet the Digital Lending Apps.
The group ‘set up in the backdrop of business conduct and customer protection concerns arising out of the spurt in digital lending activities’ has also mooted a Self-Regulatory Organisation for participants in the digital lending ecosystem.
Besides a separate law to prevent illegal digital lending activities, the group has proposed development of certain baseline technology standards and compliance with those standards as a pre-condition for offering digital lending solutions.
It has also suggested that disbursement of loans be made directly into the bank accounts of borrowers and servicing of loans be done only through the bank accounts of the digital lenders.
All data collection must require the prior consent of borrowers and come ‘with verifiable audit trails’ and the data itself ought to be stored locally, it mooted.