The central bank has expressed concerns about the evaluation process made by these banks and fintechs especially in the case of where the gold is sourced from
Cautioned banks are reportedly in talks with the fintech startups to address the issues pointed out by RBI
The apex bank is also planning to set up a regulatory body called Digital India Trust Agency to curb the mushrooming growth of illegal lending apps
The Reserve Bank of India (RBI) has cautioned banks on gold loan disbursals being made through fintech startups.
As per ET’s report, the central bank has expressed concerns about the evaluation process made by these banks and fintechs, especially in the case of where the gold is sourced from.
Citing its sources in RBI, the report said, “The regulator has verbally expressed its concerns to a set of banks regarding this and asked them to take corrective actions immediately.”
Cautioned banks are in talks with the fintech startups to address the issues pointed out by RBI. This is likely to put a temporary halt to the business to ensure complete compliance.
“RBI has been closely scrutinising the gold loan business after the IIFL Finance issue. While banks may not have stopped disbursals through fintechs immediately, they are evaluating next steps closely,” a person in the know told ET.
The central bank has been very strictly checking the compliance status of the fintechs from different angles, especially lending. Recently, the RBI also rolled out a regulatory guideline for the fintechs to follow in case of lending business.
As per the bank, this is aimed at ensuring that the borrowers have prior information about the potential lenders in order to make an informed decision. Under this, it has specifically targeted the likes of Paisabazaar, BankBazaar, CreditMantri and Paytm, which provide loans from their partner REs such as banks and non-banking financial companies (NBFCs).
In line with this, the RBI recently discarded the NBFC licence of Acemoney (India) over irregularities in lending practices. Explaining the process, the RBI said that it failed to comply with the rules of managing risks and code of conduct in outsourcing financial services in its digital lending operations undertaken through third-party apps.
In addition, the apex bank is also planning to set up a regulatory body called Digital India Trust Agency (DIGITA) to curb the mushrooming growth of illegal lending apps.
