RBI Governor Shaktikanta Das revealed plans for a centralized database of approved lending platforms during the recent monetary policy meeting.
Das outlined that RBI-regulated financial institutions must provide and maintain details of their digital lending applications in this new system.
The initiative, as explained by the Governor, seeks to equip consumers with tools to distinguish between legitimate and potentially harmful lending apps.
The Reserve Bank of India (RBI) will be setting up a public repository of digital lending apps to address issues arising from unauthorised platforms.
This initiative is a part of the RBI’s ongoing efforts to develop an orderly digital lending ecosystem in India, building upon guidelines issued in September 2022 and June 2023.
RBI-regulated entities will report and update information about their digital lending apps in this repository, a measure aimed at helping consumers identify unauthorised lending apps. The repository will be available on the RBI’s website, with data submitted directly by regulated entities without RBI intervention.
“The Reserve Bank proposes to create a public repository of digital lending apps deployed by regulated entities to address the problems arising from unauthorised digital lending apps. The RBI’s regulated entities will report and update information about their digital lending apps in this repository. This measure will help consumers identify unauthorised lending apps,” said RBI governor Shaktikanta Das during the bimonthly monetary policy committee meeting.
Das emphasised that this repository will be updated as regulated entities report new Digital Lending Apps (DLAs) or remove existing ones. The initiative aligns with the RBI’s digital lending guidelines, which mandate direct loan transactions between borrowers and lenders, transparent disclosure of terms, robust grievance redressal mechanisms, and protection of borrower data.
The announcement comes after the RBI considered establishing a Digital India Trust Agency (DIGITA) to combat illegal lending apps.
In March, the RBI proposed DIGITA to verify digital lending apps and maintain a public register of verified apps. Apps without DIGITA’s ‘verified’ mark would be considered unauthorised for law enforcement purposes.
This step aims to tackle the increase in fraudulent activities within the digital lending sector and promote transparency and accountability. It addresses concerns about unscrupulous players in digital lending who falsely claim association with RBI-regulated entities.
Governor Das indicated that detailed instructions regarding the implementation of this repository will be issued shortly. The RBI expects this measure to further strengthen consumer protection in the digital lending space.
