RBI forms working group to examine lending transactions via online portals, apps1 min read . Updated: 13 Jan 2021, 05:02 PM IST
- The working group will consist of both internal and external members
- These members will work on evaluating digital lending activities and assessing the penetration and standards of outsourced digital lending activities in RBI regulated entities, among other things
Reserve Bank of India has constituted a Working Group (WG) on digital lending including lending through online platforms and mobile apps. It will study aspects of digital lending activities in the regulated and unregulated financial sector.
"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," the central bank said in a statement.
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.
The group will consist of both internal and external members. The internal member will include RBI's Jayant Kumar Dash, Executive Director, (Chairman), Ajay Kumar Choudhary, Chief General Manager-in-Charge, Department of Supervision, P. Vasudevan, Chief General Manager, Department of Payment and Settlement Systems and Manoranjan Mishra, Chief General Manager, Department of Regulation, RBI (Member Secretary) while the external members will comprise Vikram Mehta, Co-founder, Monexo Fintech and Rahul Sasi, Cyber Security Expert & Founder of CloudSEK.
These members will work on evaluating digital lending activities and assessing the penetration and standards of outsourced digital lending activities in RBI regulated entities. There will also be expected to identify risks posed by unregulated digital lending to financial stability, regulated entities and consumers, suggest regulatory changes, if any, to promote orderly growth of digital lending, recommend measures, if any, for expansion of specific regulatory or statutory perimeter and suggest the role of various regulatory and government agencies, recommend a robust Fair Practices Code for digital lending players, insourced or outsourced, suggest measures for enhanced Consumer Protection as well as recommend measures for robust data governance, data privacy and data security standards for deployment of digital lending services.
RBI also said that the group has been advised to submit its report within three months.