Topics Covered: Cyber security related issues.
RBI forms working group on digital lending:
Context:
The Reserve Bank of India (RBI) has constituted a working group on digital lending — including online platforms and mobile apps — to study all aspects of digital lending activities in the regulated financial sector as well as by unregulated players.
- This is to ensure that an appropriate regulatory approach is put in place.
The working group will:
- Evaluate digital lending activities and assess the penetration and standards of outsourced digital lending activities in RBI regulated entities.
- Identify the risks posed by unregulated digital lending to financial stability, regulated entities and consumers.
- Suggest regulatory changes to promote orderly growth of digital lending.
- Recommend measures for expansion of specific regulatory or statutory perimeter and suggest the role of various regulatory and government agencies.
- Recommend a robust fair practices code for digital lending players.
Benefits of digital lending:
- Digital lending has the potential to make access to financial products and services more fair, efficient and inclusive.
- From a peripheral supporting role a few years ago, FinTech-led innovation is now at the core of the design, pricing and delivery of financial products and services.
Need of the hour:
A balanced approach needs to be followed so that the regulatory framework supports innovation while ensuring data security, privacy, confidentiality and consumer protection.
What are the issues wrt digital lending apps?
- They attract borrowers with promise of loans in a quick and hassle-free manner.
- But, Excessive rates of interest and additional hidden charges are demanded from borrowers.
- Such platforms adopt unacceptable and high-handed recovery methods.
- They misuse agreements to access data on the mobile phones of the borrowers.
Sources: the Hindu.
