RBI has released the copy of the Working group report on Digital Lending for public comments.
Comments may be sent through email before December 31, 2021 to : email@example.com
The committee was chaired by Mr Jayant Kumar Dash and comprised of M/s Ajay Kumar Choudhary, P Vasudevan, Vikram Mehta, Rahul Sasi and Manoranjan Mishra as members.
The gist of the recommendations are as follows:
The following are a gist of the key recommendations:
- Subjecting the Digital Lending Apps to a verification process by a nodal agency to be setup in consultation with stakeholders.
- Setting up of a Self-Regulatory Organisation (SRO) covering the participants in the digital lending ecosystem.
- A separate legislation to prevent illegal digital lending activities.
- Development of certain baseline technology standards and compliance with those standards as a pre-condition for offering digital lending solutions.
- Disbursement of loans directly into the bank accounts of borrowers; disbursement and servicing of loans only through bank accounts of the digital lenders.
- Data collection with prior and explicit consent of borrowers with verifiable audit trails.
- All data to be stored in servers located in India.
- Algorithmic features used in digital lending to be documented to ensure necessary transparency.
- Each digital lender to provide a key fact statement in a standardised format including the Annual Percentage Rate.
- Use of unsolicited commercial communications for digital loans to be governed by a Code of Conduct to be put in place by the proposed SRO.
- Maintenance of a ‘negative list’ of Lending Service Providers by the proposed SRO.
Standardised code of conduct for recovery to be framed by the proposed SRO in consultation with RBI.