Taking cognizance of the spurt in digital lending by online platforms and mobile apps, the Reserve Bank of India (RBI) has set up a working group to evaluate and recommend measures on digital lending. This group will also identify risks posed by unregulated digital lending to financial stability, regulated entities, and consumers.
In a release, RBI says, "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."
This working group is headed by Jayant Kumar Dash, executive director of RBI. Other members of the group from RBI include, Ajay Kumar Choudhary, chief general manager-in-charge in the department of supervision, P Vasudevan, chief general manager (CGM) from the department of payment and settlement systems and Manoranjan Mishra, CGM of the department of regulation, who is also member secretary. External members on the working group are Vikram Mehta, Co-founder of Monexo Fintech and Rahul Sasi which is cyber security expert and founder of CloudSEK.
The working group will evaluate digital lending activities and assess the penetration and standards of outsourced digital lending activities in RBI regulated entities. It will also identify risks posed by unregulated digital lending to financial stability, regulated entities, and consumers; and suggest regulatory changes, if any, to promote orderly growth of digital lending.
The group will also 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; and recommend measures for robust data governance, data privacy and data security standards for deployment of digital lending services.
The group is expected to submit its report within three months, the RBI says.