Bring digital loans under modified norms, banks told

PTI

Mumbai, September 2

The RBI has given time till November 30 to banks and NBFCs to put in place a mechanism to ensure that existing digital loans are in compliance with the modified norms aimed at protecting the interest of customers. Last month, the central bank tightened norms for ‘digital lending’ to prevent charging of exorbitant interest rates by certain entities and also check unethical loan recovery practices.

New guidelines

• Under the new norms, all loan disbursals and repayments are required to be executed only between the bank accounts of borrower and the regulated entities without any pass-through/pool account of the Lending Service Providers

In a circular, the RBI said outsourcing arrangements entered by Regulated Entities (REs) with a Lending Service Provider (LSP)/ Digital Lending App (DLA) do not diminish the REs’ obligations and they shall continue to conform to the extant guidelines.

It further said the instructions are applicable to the ‘existing customers availing fresh loans’ and to ‘new customers getting onboarded’.

“However, in order to ensure a smooth transition, REs shall be given time till November 30, 2022, to put in place adequate systems and processes to ensure that ‘existing digital loans’ are also in compliance with these guidelines in both letter and spirit,” the Reserve Bank said. Under the new norms, all loan disbursals and repayments are required to be executed only between the bank accounts of borrower and the regulated entities.

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