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RBIs-New-Digital-Lending-Directions-2025-What-You-Need-to-Know

The Reserve Bank of India has released comprehensive guidelines to regulate digital lending activities. Swipe to learn the key changes that will impact borrowers and lenders. Key Definitions Digital Lending Remote, automated lending process using digital technologies for customer acquisition through servicing.<br>

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RBIs-New-Digital-Lending-Directions-2025-What-You-Need-to-Know

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  1. RBI's New Digital Lending Directions 2025: What You Need to Know The Reserve Bank of India has released comprehensive guidelines to regulate digital lending activities. Swipe to learn the key changes that will impact borrowers and lenders.

  2. Why These Guidelines Matter Customer Protection Addresses concerns around mis-selling, data privacy breaches, and unethical recovery practices. Digital Lending Growth Provides framework for responsible innovation in financial products and credit delivery. Regulatory Clarity Consolidates previous instructions with new measures for lending service providers.

  3. Who Must Comply? Commercial Banks All scheduled commercial banks operating in India. Co-operative Banks Urban, State, and Central Co-operative Banks. NBFCs & HFCs All Non-Banking Financial Companies including Housing Finance Companies. Financial Institutions All All-India Financial Institutions. These directions apply to all digital lending activities of these Regulated Entities (REs).

  4. Key Definitions Digital Lending Remote, automated lending process using digital technologies for customer acquisition through servicing. Digital Lending Apps (DLAs) Mobile/web applications that facilitate digital lending services, including those operated by LSPs. Lending Service Provider (LSP) Agent of RE who carries out one or more digital lending functions on behalf of the RE.

  5. RE-LSP Arrangements Contractual Agreement Clear definition of roles, rights, and obligations between RE and LSP. 1 Enhanced Due Diligence Assessment of LSP's technical capabilities, data privacy policies, and past conduct. 2 Periodic Review Regular monitoring of LSP conduct and appropriate action for deviations. 3 Ultimate Responsibility RE remains fully responsible for all acts and omissions of the LSP. 4

  6. Multiple Lender Arrangements Digital View of Offers LSP must provide view of all loan offers matching borrower's request. Transparent Comparison Must include lender names, loan amount, tenor, APR, and repayment details. No Biased Promotion Content must be unbiased without pushing products of particular REs. These requirements come into effect from November 1, 2025.

  7. Customer Protection Measures Key Fact Statement Mandatory KFS with loan details and digitally signed documents. Cooling-off Period Option to exit loan by paying principal and proportionate APR without penalty. Grievance Redressal Designated officers and complaint facility on DLAs and websites. Transparent Disclosures Details of products, LSPs, and customer care on RE website.

  8. Loan Disbursement & Repayment Direct Disbursement Loans must be disbursed directly to borrower's bank account, not third parties. Direct Repayment Repayments must go directly to RE's account without pass-through accounts. No LSP Charges Fees to LSPs must be paid by RE, not collected from borrowers.

  9. Data Privacy Requirements Need-based Collection Only with explicit consent and audit trail Limited Storage Only minimal data by LSPs India-based Servers All data must be stored in India Borrowers must have options to give/deny consent, restrict disclosure, and revoke previously granted consent.

  10. Default Loss Guarantee (DLG) 5% Cap on Cover DLG cannot exceed 5% of total amount disbursed from loan portfolio. Eligible Providers Only LSPs or other REs engaged as LSPs can provide DLG. Acceptable Forms Cash deposit, fixed deposit with lien, or bank guarantee. Timely Invocation Must be invoked within 120 days of overdue period.

  11. Reporting Requirements DLA Directory All apps must be reported to RBI by June 15, 2025 1 Compliance Certification Chief Compliance Officer must certify data accuracy Credit Information Reporting All digital lending must be reported to CICs RBI will publish the DLA directory on its website in an automated manner without verification.

  12. Stay Informed & Protected These directions come into effect immediately, with specific provisions phased in through November 2025. If you're using digital lending apps, verify they're from legitimate regulated entities by checking RBI's official directory after June 15, 2025. Have concerns about a digital lender? File complaints through the RBI's Complaint Management System at cms.rbi.org.in or the Sachet Portal. Share this post with friends and family who use digital lending services to help them stay protected!

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