»Rbi Will Release Guidelines For Online Loan Product Aggregators
RBI Will Release Guidelines For Online Loan Product Aggregators
The Reserve Bank of India declared that it will shortly establish the legal framework for web-aggregation of loan products in an effort to protect the interests of borrowers. A single regulatory framework for connected lending will be released by the central bank and made available to all of the businesses under its supervision. "We have become aware of multiple concerns regarding the online consolidation of loan products that could potentially negatively impact consumers' interests," Das stated at the monetary policy meeting.
The Reserve Bank of India declared that it will shortly establish the legal framework for web-aggregation of loan products in an effort to protect the interests of borrowers. A single regulatory framework for connected lending will be released by the central bank and made available to all of the businesses under its supervision. “We have become aware of multiple concerns regarding the online consolidation of loan products that could potentially negatively impact consumers’ interests,” Das stated at the monetary policy meeting. August 2022 saw the introduction by the RBI of the regulatory framework for online loan product aggregators. Under WALP, loan offers from several lenders are combined and presented on an electronic platform, giving borrowers the ability to evaluate and select the most advantageous loan option from among the lenders that are available. In accordance with the Working Group’s (on digital lending) advice, it has been determined to subject the loan aggregation services provided by Lending Service Providers (LSPs) to a thorough regulatory framework. The framework’s main goals will be to improve customer centricity, give borrowers more information to make decisions, and make WALP processes more transparent. According to the RBI, the specific recommendations will be released separately. In addition, the central bank announced that it will introduce a framework for connected lending, or lending to those with the ability to direct or affect a lender’s choice. Should the lender not have an arm’s length relationship with these borrowers, then such lending may be cause for concern. A moral hazard problem with such financing could result in concessions made to credit control and pricing. The restrictions that are now in place regarding this matter have a narrow scope and do not apply to every regulated entity equally. In light of this, it has been determined to develop a single regulatory framework for connected lending that will apply to all Reserve Bank-regulated firms. Public comments will be accepted on a draft circular in this regard, the RBI announced.