The Reserve Bank of India unveiled the guidelines it intends to impose on digital lenders, suggesting more transparency and control for customers as the South Asian nation’s central bank takes further steps to crack down on shoddy practices and creditors.
The guidelines released Wednesday dictate who can lend to borrowers in India, what data they can collect from borrowers and mandate expanded disclosure requirements, a move that could unnerve many fintech startups in the world’s second-largest Internet market.
Lenders will not be allowed to increase a customer’s credit limit without their consent and will be required to disclose annual loan rates in clear terms. Digital lending apps will also be required to obtain explicit prior consent from customers before collecting any data.
According to the guidelines, in all cases, digital lenders should stop accessing cell phone resources such as files and media, contact lists, call logs, phone features, etc. One-time access to the camera, microphone, location or any other necessary facility should be allowed only with the explicit consent of the borrower.
The guidelines, some of which have been approved in principle, were first proposed last year amid the emergence of many sketchy lending apps and non-bank financial institutions charging high fees to customers in India in recent years. The prevalence of the abbreviated approach prompted Google to pull some personal loan apps from India’s Play Store last year and to implement stronger measures to prevent abuse.
