The Reserve Bank of India have directed banks and non-banking finance companies (NBFCs) to strictly adhere to its business practices code and outsourcing norms while lending, warning that any kind of breach will amount to a serious consequences.
The banking regulator stated in its notification issued on June 24 that a bank or an NBFC will have to notably display on its website the names of its agents.
RBI also said that agent platforms working for a lender also need to inform their customers on whose behalf they are working. Further, a sanction letter should have to be issued to the customer on the lender’s letterhead. A copy of the loan enclosures has to be given to the borrower when the loan is sanctioned or disbursed.
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The norms issued by the regulator acknowledged the significance of transparency in the digital credit intermediation, he said.
The central bank’s communiqué comes at a time when India is witnessing rise of several digital lending platforms. These startups extend loans directly or through partnerships with banks and NBFCs.
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