RBI Forms Working Group to Develop & Regulate Digital Lending

Reserve Bank of India (RBI). 

(Photo Courtesy: IANS)

The Reserve Bank of India on Wednesday, 13 January, came up with a working group to develop and regulate digital lending, including lending through online platforms and mobile applications, Business Standard reported.

All aspects of digital lending activities in the regulated financial sector as well as by unregulated players will be studied by the Working Group so that a proper regulatory approach can be formed.

Online lending platforms/mobile lending apps’ recent popularity have raised serious concerns which have larger implications that need to be addressed, the RBI was quoted as saying by Business Standard.

The group comprises RBI Executive Director Jayant Kumar Dash as the Chairman, along with four internal and two external members. It has been asked to submit its report within three months.

Along with identifying risks posed by unregulated digital lending to financial stability, regulated entities and consumers, the group will also assess the penetration and standards of outsourced digital lending activities in RBI-regulated entities.

The group has also been asked to suggest regulatory changes to promote orderly growth of digital lending.

This move comes after recent instances of suicides caused by harassment and various imperious recovery methods used by lending apps.

(With inputs from Business Standard)