RBI Governor Shaktikanta Das, speaking at a bank meeting last month, said, “Online lending companies should operate only on the basis of the license granted to them. If they are involved in any activities beyond that, they need to get permission from RBI. Indulging in unlicensed activities is unacceptable. Violations cannot be tolerated.” He had said categorically.
In this case, the rules for online lending apps have been released. They are:-
All lending and repayment operations should be executed between the borrower’s bank account and the regulated institution only. These should not be processed through credit service provider or third party accounts.
Any fees payable to a digital lender must be paid directly by regulated entities such as banks. Borrower does not need to pay.
A Key Fact Statement should be provided to the borrower before executing the loan agreement.
All costs of digital loans in the form of annual percentage rate (interest) should be communicated to the borrower. This information should also be included in the key information report.
Automatic increase of credit limit without express consent of borrower is prohibited.
Borrowers can pay principal and prorated interest without penalty and get out of digital loans. A cooling off period will be provided as part of the loan agreement.
Banks or Lending Licensed Institutions shall ensure that there is a Nodal Grievance Redressal Officer to deal with complaints related to digital credit. The contact details of the Grievance Officer should be mentioned on the website.
According to the existing RBI guidelines, any complaint raised by the borrowers should be redressed by the institutions within 30 days. Otherwise redress can be sought under Reserve Bank’s – Integrated Ombudsman Scheme.
With such new rules, online loan processors will now be looked after.