Reserve Bank of India (RBI) is setting up a Working Group of seven members to study all the aspects of digital lending activities through the regular financial sector and as well as in unregulated players. The new intervention is happening in the background of the recent spurt and popularity of online lending platforms and mobile lending apps, RBI notified on Wednesday. Working Group will be chaired by Jayant Kumar Dash, Executive Director, RBI. Group has been asked to submit a report within 3 months.
"While penetration of digital methods in the financial sector is a welcome development, the benefits and certain downside risks are often interwoven in such endeavors. A balanced approach needs to be followed so that the regulatory framework supports innovation while ensuring data security, privacy, confidentiality, and consumer protection" RBI observed.
Based on the official press release, Working Group will be responsible for identifying risks posed by unregulated digital lending to financial stability, regulated entities, and consumers, suggesting regulatory changes, and measures for enhanced consumer protection and to recommend a robust Fair Practices Code for digital lending players, insourced or outsourced.