RBI releases first set of digital lending norms

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Editor's note: The Reserve Bank of India on Wednesday released guidelines surrounding digital lending in India as part of its efforts to regulate the industry. These are based on recommendations made by a six-member working group on digital lending, which was set up in January last year by the central bank and submitted its report in November. The RBI has classified digital lenders into three groups: RBI-approved lending institutionsEntities authorized to lend as per other statutory provisions but not regulated by the RBIEntities lending outside the purview of statutory or regulatory provisions While the guidelines have addressed each of these categories, they focus mainly on entities regulated by the RBI and the service providers they employ, also called lending service providers. For companies falling in the second and third categories, the RBI has recommended that relevant authorities form their own regulations to “curb illegitimate lending operations”. The most significant among the new guidelines is that loan disbursals and repayments have to be carried out only between the bank accounts of the borrower and the regulated entity without any pass-through or pool account …