New Delhi, Nov 18 (UNI) The Reserve Bank of India (RBI)-constituted working group on digital lending has proposed to subject digital lending Apps to a verification process and called for storing all data on servers located in India among a set of measures to enhance customer protection.
"The thrust of the report has been on enhancing customer protection and making the digital lending ecosystem safe and sound while encouraging innovation," an official release from RBI said.
The working group (WG) on digital lending including lending through online platforms and mobile apps headed by RBI Executive Director Jayant Kumar Dash has recommended to set up a Self-Regulatory Organisation (SRO) covering the participants in the digital lending ecosystem.
It may be noted that the central bank had set up the panel in January this year in the wake of business conduct and customer protection concerns arising out of the spurt in digital lending activities.
The panel has said that loans should be disbursed directly into the bank accounts of borrowers. Also, data should be collected with prior and explicit consent of borrowers with verifiable audit trails.
It has also said that algorithmic features used in digital lending should be documented to ensure necessary transparency.
The working group has recommended that use of unsolicited commercial communications for digital loans should be governed by a code of conduct to be put in place by the proposed SRO.
Maintenance of a ‘negative list’ of Lending Service Providers by the proposed self-regulating agency has also been proposed.
The working group has suggested a standardised code of conduct for recovery of loans which could be framed by the proposed SRO in consultation with RBI.
The RBI has sought comments from the public and concerned stakeholders on the recommendations by December 31, 2021.
"The comments will be examined before a final view is taken on the recommendations and suggestions made by the WG," the RBI statement said.
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