RBI to bring digital loan aggregators under regulation

Digital lenders have been accused of charging high interest rates and using illegal recovery measures. There are hundreds of unauthorised digital lenders which are outside the RBI’s purview.

The digital lending universe is classified into three groups: Entities regulated by the RBI and permitted to carry out lending business; entities authorised to carry out lending as per other statutory/regulatory provisions but not regulated by RBI; and entities lending outside the purview of any statutory/ regulatory provision.

The central bank’s regulatory framework is focused on the digital lending ecosystem of RBI’s regulated entities and the lending service providers engaged by them to extend various permissible credit facilitation services.

“As regards entities falling in the second category, the respective regulator or controlling authority may consider formulating or enacting appropriate rules and regulations on digital lending based on the recommendations of WGDL (working group on digital lending). For the entities in the third category, the WGDL has suggested specific legislative and institutional interventions for consideration by the Central Government to curb the illegitimate lending activity being carried out by such entities,” the RBI said.