Mumbai: The Reserve Bank of India has updated its guidelines to loan aggregators across the web to ensure consumers get a fair and transparent deal. O RBI also clarified the guidelines on default guarantees that can be provided by fintechs to lenders on personal loans they distribute.
The draft standards require loan service providers (PSL) to offer customers a digital viewing of all offers available to the borrower from all digital lenders with which the LSP has an agreement. This digital preview must include the name of the lender, the loan amount and term, the annual percentage rate, and other terms and conditions. This information must be presented in a way that allows comparison of different loans.
The LSP is not authorized to promote or force loans from one entity over another, nor may it use deceptive standards to mislead borrowers into choosing a specific loan. These standards for digital lenders are in the form of a draft guideline that will be implemented after receiving comments.
Meanwhile, the RBI has tightened norms for fintechs that distribute loans but bear credit risk by providing guarantees against losses due to default. Earlier, the RBI had capped the maximum guarantee at 5% of the loan value. The RBI has now said that the portfolio on which guarantees are offered must be fixed and cannot be part of a dynamic loan portfolio. Furthermore, if a lien is invoked, the defaulted amount cannot be reinstated.
The RBI has tightened norms for regulated entities distributing loans on behalf of third parties. In these cases, the regulated entity must reduce the total amount of its capital guarantee.
The draft standards require loan service providers (PSL) to offer customers a digital viewing of all offers available to the borrower from all digital lenders with which the LSP has an agreement. This digital preview must include the name of the lender, the loan amount and term, the annual percentage rate, and other terms and conditions. This information must be presented in a way that allows comparison of different loans.
The LSP is not authorized to promote or force loans from one entity over another, nor may it use deceptive standards to mislead borrowers into choosing a specific loan. These standards for digital lenders are in the form of a draft guideline that will be implemented after receiving comments.
Meanwhile, the RBI has tightened norms for fintechs that distribute loans but bear credit risk by providing guarantees against losses due to default. Earlier, the RBI had capped the maximum guarantee at 5% of the loan value. The RBI has now said that the portfolio on which guarantees are offered must be fixed and cannot be part of a dynamic loan portfolio. Furthermore, if a lien is invoked, the defaulted amount cannot be reinstated.
The RBI has tightened norms for regulated entities distributing loans on behalf of third parties. In these cases, the regulated entity must reduce the total amount of its capital guarantee.
