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.
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.