RBI constitutes working group to study digital lending

The Reserve Bank of India (RBI) has constituted a working group to study digital lending, including lending through online platforms and mobile apps. The RBI said that the working group will 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.

This move assumes significance in the context of recent reports of illegal app-based lenders thriving across the country. It mentioned that while penetration of digital methods in the financial sector is a welcome development, the benefits and certain downside risks are often interwoven in such endeavours. A balanced approach needs to be followed so that the regulatory framework supports innovation while ensuring data security, privacy, confidentiality and consumer protection.

It also stated that digital lending has the potential to make access to financial products and services more fair, efficient and inclusive. From a peripheral supporting role a few years ago, fintech-led innovation is now at the core of the design, pricing and delivery of financial products and services.