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Business Finance

What are RBI Guidelines on Digital Lending?

Those days are gone when anyone had to struggle for an instant loan or had to wait in long queues. However, now for this reason the cases of fraud are also increasing and questions of data security are also emerging rapidly. With the introduction of personal loan online apps, various scammers are finding their way to take advantage of people’s uncertain times. As more and more instant personal loan apps are being introduced, it has become difficult to differentiate between legal and fraud apps.

loan

 When the panel set by the regulator found that, out of a total of 1,100 loan apps available on the various app stores, 600 of them are illegal, RBI had to enter the circle to set the new norms of financial lending and save the interest of the borrowers. The guidelines came in the wake of complaints of harassment by various illegal digital lending apps. 

Recently the working group committee of RBI has made recommendations to safeguard the borrowers’ interests. The committee was set up in the backdrop of business conduct and customer protection concerns that were arising out of the spurt in digital lending activities.

The guidelines issued by RBI to stop illegal and fraudulent lending activities include:

  • The Non-Banking Financial Companies (NBFCs) or banks must state the name of an online platform that they are working with.
  • The personal loan online apps must be subjected to the verification process by the nodal agency.
  • Digital platforms that are used on behalf of the banks and NBFCs should disclose the name of their bank or NBFC to the customers.
  • Also, according to the central bank, lending institutions should issue sanction letters before executing the loan agreement. 
  • The public lending activities can only be taken up by those banks and NBFCs that are registered with RBI or the entities that the state government registers.
  • Disbursement of loan amount should directly be done into the borrowers’ bank account.
  • The algorithm features used in digital lending should ensure 100% transparency.
  • Digital platforms that are used on behalf of the banks and NBFCs should disclose the name of their bank or NBFC to the customers.

India is on the verge of a digital financial lending revolution. From FY 2018-19 to FY 2020-21, financial transactions undertaken from the online mobile lending apps have increased from 29% to 76%. But, digitalization has even led to an increasing number of frauds, and scammers take advantage of people’s situations. Therefore, the RBI has come into action and introduced various guidelines to ensure that there is no fraud in the lending system. The digital lenders should proactively commit to the code of conduct to ensure transparency and consumer protection.

One of the most reliable and safe personal loan apps is TrueBalance. I would personally recommend you all to download this loan app from the Google Play Store and avail of an instant loan at any hour of the day, as its services are 24*7 hours available. This mobile lending platform is registered with RBI and follows its rules and regulations.

With this online loan app, you can borrow an amount of upto ₹50,000 without backing it up with any security. Also, the interest rate charged by lenders on this personal loan online app is affordable . Can you even believe how financially sound and relaxing an option it is to avail of an instant personal loan at the time of emergency? Download the TrueBalance online app and enjoy a smooth financial experience.

 

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