As it has been advocated by eminent experts that the RBI is keeping a close tab on fintech lending platforms, the RBI’s recent order dated June 24, 2020 is a testimony of the same.
The RBI has observed that lots of complaints have been filed against lending platforms which primarily relate to exorbitant interest rates, non-transparent methods to calculate interest, harsh recovery measures, unauthorized use of personal data and bad behavior. Considering this, the RBI has directed the banks/ NBFCs to adhere to the defined Fair Practices Code guidelines in letter and spirit as well as meticulously follow regulatory instructions on outsourcing of financial services and IT services to fintech platforms.
Further, the RBI has directed the fintech platforms that:
a. names of all banks/NBFCs should be disclosed on the websites of fintech platforms. Similarly, banks/ NBFCs would disclose names of all fintech platforms on their websites;
b. the sanction letter shall be issued to the borrower on the letter head of the bank/NBFC concerned;
c. copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement shall be furnished to all borrowers at the time of sanction/ disbursement of loans;
d. adequate efforts shall be made towards creation of awareness about the grievance redressal mechanism.
With a clear direction that banks/NBFCs should monitor the process / procedure of fintech platforms since outsourcing of any activity by banks/ NBFCs does not diminish their regulatory obligations, it is a welcome step to regulate the unregulated fintech platforms. Many more such steps awaited, for sure!
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