The Reserve Bank has given time till November 30 to banks and NBFCs to put in place a mechanism to ensure that existing digital loans are in compliance with the modified norms aimed at protecting the interest of customers. Last month, the central bank tightened norms for ‘digital lending’ to prevent charging of exorbitant interest rates by certain entities and also check unethical loan recovery practices. In a circular, the RBI said outsourcing arrangements entered by Regulated Entities (REs) with a Lending Service Provider (LSP)/ Digital Lending App (DLA) do not diminish the REs’ obligations and they shall continue to conform to the extant guidelines on outsourcing.
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