RBI report says separate legislation must be implemented to prevent illegal digital lending
A working group of the Reserve Bank of India (RBI) has recommended the establishment of a self-regulatory organization composed of digital lending participants.
The recommendation was made as part of a report on digital lending through online platforms and mobile applications.
The RBI report said separate legislation must be in place to prevent illegal digital lending activities and all data must be stored in servers in India.
The Commission recommends that data collection be done only with the prior and explicit consent of the borrower.
“The strength of the report is to strengthen customer protection and make the digital lending ecosystem safe and healthy while encouraging innovation,” the report said.
The digital loan application industry has attracted scrutiny from the RBI and the police following a number of complaints regarding privacy violations and harassment by recovery officers.
To address those issues, the RBI established a six-member working group in January to assess digital loans and identify risks posed by unregulated digital lending to the stability of digital loans. financial institutions, regulated entities, and consumers.
