In September 2021, the Reserve Bank of India (RBI) had issued guidelines and regulations related to digital lending platforms to protect the interests of borrowers and ensure responsible lending practices in the digital lending space. These guidelines were introduced to address the growing presence of digital lending companies and the potential risks associated with their operations. Please note that regulations and guidelines may have evolved or been updated since then, so it's essential to refer to the latest information from RBI for the most current guidelines.


Key highlights of RBI's digital lending guidelines:


Registration of Digital Lending Platforms: RBI emphasized that all digital lending platforms operating in India must be registered as Non-Banking Financial Companies (NBFCs) or work with registered NBFCs to ensure compliance with the regulations.

Fair Practices Code: Digital lending platforms were required to adhere to a Fair Practices Code that outlines the principles of transparency, privacy, and ethical practices when dealing with borrowers. This includes clear and transparent disclosure of loan terms, interest rates, fees, and charges.

Customer Data Protection: RBI laid down specific guidelines for data privacy and security to protect the personal and financial information of borrowers. Lending platforms were required to obtain explicit consent from customers before accessing their data and ensure its confidentiality and secure storage.

Grievance Redressal Mechanism: The guidelines mandated the establishment of a robust grievance redressal mechanism by digital lending companies. This was to enable borrowers to raise complaints and seek resolutions in a timely and efficient manner.

Transparent Interest Rates: Lenders were required to provide clear and detailed information about the interest rates charged on loans, ensuring borrowers have a complete understanding of the cost of borrowing.

No Unauthorized Access to Device Data: Digital lending platforms were prohibited from accessing personal data on the borrower's device without explicit consent.

Prohibition on Harassment: RBI stressed the prohibition of abusive and coercive debt collection practices by digital lending platforms. Borrowers were to be treated with respect and dignity during the debt recovery process.

Due Diligence of Partner Entities: Lending platforms were required to conduct thorough due diligence of partner entities or agents involved in loan origination and ensure their compliance with regulatory norms.

Public Disclosure: Digital lending platforms were required to make necessary disclosures about their business practices, terms, and conditions on their websites to promote transparency and clarity.

Supervision and Monitoring: RBI retained the right to supervise and monitor digital lending platforms to ensure their compliance with the guidelines and regulations.

It's crucial for digital lending companies to stay updated with the latest guidelines issued by the RBI and adhere to the principles of responsible lending to safeguard the interests of borrowers and promote a healthy and sustainable digital lending ecosystem in India.