The Reserve Bank of India (RBI) has given lenders until the end of November to implement adequate systems and processes to ensure that new and existing loans comply with its digital loan rules issued last month.
The RBI's move follows several reports highlighting issues of customers facing torture and abuse from agents of digital loan apps in the country. As we've reported, in some cases, customers failed to bear the psychological burden given by threat actors and committed suicide.
Based on the recommendations of a working group set up in 2021, the guidelines spelt out who can lend to borrowers in the country, what all data lenders can access and mandated expanding the disclosure requirements to provide more customer transparency and control.
On Friday, the RBI said that the guidelines should apply to both existing customers availing fresh loans and new customers getting onboarded.
The central bank has given time until November 30 to all regulated entities, which are licensed by the regulator, to ensure that the existing digital loans are also in compliance with the new rules "in both letter and spirit."
"These directions are issued under sections 21, 35A and 56 of the Banking Regulation Act, 1949, sections 45JA, 45L and 45M of the Reserve Bank of India Act, 1934, sections 30A and 32 of the National Housing Bank Act, 1987, section 6 of the Factoring Regulation Act, 2011 and section 11 of the Credit Information Companies (Regulation) Act, 2005," the RBI said in its letter addressed to all commercial and co-operative banks and non-banking financial companies including housing finance companies.