“Recent spurt and popularity of online lending platforms/mobile lending apps (‘digital lending’) has raised certain serious concerns which have wider systemic implications. Against this backdrop, a Working Group (WG) is being set up to study all aspects of digital lending activities in the regulated financial sector as well as by unregulated players so that an appropriate regulatory approach can be put in place,” RBI said in a statement.
The WG will evaluate digital lending activities, assess their penetration and standards of outsourced digital lending activities. The WG will also identify risks posed by unregulated digital lending to the financial stability of regulated entities and consumers.
RBI said in a statement that the WG is to suggest regulatory changes to promote orderly growth of the digital lending sector. The working group will also help define the role of various regulators and government agencies. Recommendations will also be made on if any powers of a regulator need to be expanded or a statutory perimeter needs to be adopted.
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A Fair Practices Code for digital lending players, insourced or outsourced and measures for consumer protection will also be recommended by the working group. In addition, it will also recommend measures for robust data governance, data privacy and data security standards for deployment of digital lending services.