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Industry players have welcomed the report of the Working Group set up by the Reserve Bank of India (RBI) on digital lending and have said it would ensure higher standards of ethical behaviour and code of conduct for the digital lending platforms, and ensure consumer protection from unethical lenders.
“Self-regulatory organisation is the call of the hour in order to structure the industry and to set the rules for the fintech members and customers. Fintech Association for Consumer Empowerment (FACE) members have always abided with the disclosure of all relevant information including the interest rates, as it believes that transparency and proactive commitment to consumers builds brand trust. Data privacy is of utmost importance and should be strictly adhered to,” said FACE.
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Gaurav Chopra, Founder and CEO, IndiaLends and founding member of Digital Lending Association of India, noted that recommendations such as auditable logs for every action that a user performs on the app will demolish many existing loan sharks and curb unfair practices.
Also read: RBI calls for public comments on digital lending
“Moreover, the recommendation for digital lenders to provide a key fact statement in a standardised format including the annual percentage rate will give a better perspective to borrowers about the high percentage rate they are willing to bear. Overall, the report seeks to safeguard consumers from unregulated digital lenders who have the potential to exploit borrowers with unfair or predatory terms,” he noted.
As a founding member of DLAI, IndiaLends abides by the strict code of conduct as implemented in May 2020, which is in alignment with the suggestions of the Working Group, he further said.
The RBI had on November 18 released the report of the Working Group on digital lending including lending through an online platform and mobile apps, which has called for legislation against illegal digital lending activities as well as a verification process for these lenders and a self-regulatory organisation (SRO). It has sought public comments by December 31, 2021.
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