The Reserve Bank of India (RBI) has given lenders until the end of November to implement adequate systems and processes to ensure that new and existing loans meet its digital loan rules released last month.
RBI’s move follows several reports highlighting problems customers facing torture and abuse by digital loan application agents in the country. As we reported, in some cases, clients were unable to bear the psychological burden imposed by the threats and committed suicide.
Based on the recommendations of a task force set up in 2021, the guidelines set out who can lend to borrowers in the country, what data lenders have access to, and impose expanded disclosure requirements to ensure more transparency and control of the customers.
On Friday, the RBI said the guidelines should apply to both existing customers availing new loans and new customers coming on board.
The central bank has given all regulated entities that are licensed by the regulator until November 30 to ensure that existing digital loans also comply with the new rules “both in letter and spirit”.
“These directions are issued under Sections 21, 35A and 56 of the Banking Regulation Act, 1949, Sections 45JA, 45L and 45M of the Reserve Bank of India Act, 1934, Sections 30A and 32 of the National Housing Bank Act of 1987, Section 6 of the Factoring Regulation Act, 2011 and Section 11 of the Credit Information Societies (Regulation) Act, 2005,” RBI said in its letter addressed to all commercial and cooperative banks and non-bank financial companies, including housing finance companies.