RBI Tightens Digital Lending Norms for Consumer Protection

In a significant move to curb the excesses in the digital lending ecosystem, the Reserve Bank of India (RBI) has introduced a new set of master directions, placing a strong emphasis on consumer protection.

Key Measures Include: Regulated entities (REs) are now required to provide digitally signed loan documents and a key fact statement to borrowers. Additionally, a cooling-off period has been mandated, allowing borrowers to exit loans without penalty, except for a disclosed processing fee.

Data Privacy: Digital lending apps are prohibited from accessing phone data without explicit consent. Moreover, all user data must be stored within India, ensuring greater data sovereignty and privacy.

This initiative by the RBI aims to create a more transparent and secure digital lending environment, safeguarding the interests of consumers across the country.