To know these guidelines empowerment Self
Which lenders are covered under these guidelines
RBI Digital Lending The guidelines will be applicable on digital lending by banks, co-operative banks, non-banking financial companies (NBFCs), including housing finance companies. These guidelines also cover loans extended through digital loan applications in partnership with banks and NBFCs. Most of the digital lending service providers/apps usually take loans from one of the entities mentioned above i.e. banks and NBFCs.
Both existing customers seeking new loans and new customers joining onboard will be covered by these guidelines.
Know the charges
While seeking a loan from a lending app, first of all, a borrower needs to carefully check the charges like annual percentage rate or cost of borrowing, interest rate per annum, application fee, processing fee, late payment penalty. To know these the borrower should read the key facts statement.
Key Facts Statement: Read Carefully
Banks and NBFCs providing loans through digital lending service providers (ie, in partnership with fintech apps) or digital loan apps (such as State Bank Of India YONO), the borrower is required to provide an important fact statement before the loan is sanctioned. The regulator has also prescribed a standard format for key fact statement that needs to be provided by the lending service providers.
It is necessary to mention the name of the regulated entity such as bank or NBFC which is basically providing loan through digital loan service or app on the key fact statement.
The details include loan amount, total interest charges for the entire tenure, processing fee, insurance charges, tenure, repayment frequency, each installment amount. Other relevant information like cooling-off period, debt recovery mechanism, details of Grievance Redressal Officer are also mentioned.
As per RBI guidelines, the borrower cannot be asked to pay any fee/fees, the main fact of which is not mentioned in the statement. Thus, the borrower should read it carefully before availing the loan.
Digital loan delivery: No third-party accounts
As per RBI guidelines, the loan should be disbursed directly into the bank account of the borrower. No pass-through account or pool account of any third party should be involved in the loan disbursement process.
So, if a digital lending app is giving you a loan in partnership with a bank, the bank will disburse the loan to your bank account instead of the app. This makes the process more transparent.
communication via email and phone
Once the loan is approved, borrowers will be provided with key facts details, loan product summary, sanction letter, terms and conditions, account details and privacy policies of the loan service providers or loan app through SMS on their registered email id and phone number. should be sent from ,
In addition, any EMI received against the loan disbursed should be intimated to the borrower through email and SMS. This way a borrower will get confirmation of the amount repaid.
resting time
Once the loan is approved, it is mandatory for digital lending apps to provide a cooling-off period. The cooling-off period is a time period during which a borrower can get out of a loan without any penalty by paying the principal amount plus a proportional annual percentage interest rate.
Banks and NBFCs are free to decide the duration of the cooling-off period. However, for loans with tenor less than seven days, the cooling off period should be at least one day. The RBI mandates that the cooling-off period for loans with a tenor of more than seven days should be at least three days.
Payment, Prepayment and Penal Charges
A borrower should note that the lending service providers or digital loan apps are not allowed to charge him/her any fee if the key facts are not mentioned in the statement. The banking regulator said that only banks and NBFCs which are the original lenders in the chain are allowed to charge any fee from the borrower.
Penal charges may be levied in case of delay or prepayment of loan installments. For prepayment, penal interest will be based on the outstanding loan amount on annual basis. As per RBI regulations, the rate of penalty charges and prepayment charges, if any, should be clearly mentioned in the key fact statement provided before disbursement of the loan.
Communication details of Nodal Grievance Redressal Officer required
Is the lending service provider or digital loan app charging extra charges or calling time to time for payment?
If any borrower faces any problem, he/she can lodge a complaint with the Nodal Grievance Redressal Officer. The contact details of the Nodal Grievance Redressal Officer should be available on the website of the bank or NBFC and on the loan websites or app as well as the key fact details.
If the complaint is not resolved within 30 days, borrowers can file a complaint under the Reserve Bank-Integrated Ombudsman Scheme. “For entities not currently under the purview of RB-IOS, complaints can be lodged as per the grievance redressal mechanism prescribed by the Reserve Bank,” the regulator said.
Access, store, share borrowers’ data
Digital loan apps or lending service providers need to take consent from the borrower to access their data. RBI guidelines allow one-time access to camera, microphone, location and any other facility of the borrower for KYC process.
A borrower will also have the option to accept or deny permission to use his data and share it with any third party. There will also be an option to delete data while uninstalling the loan app.
The regulator says that unless permitted by statutory guidelines, no biometric data can be stored in the system by apps or service providers. RBI mentions, “The purpose of obtaining consent of the borrowers needs to be disclosed at each stage of the interface with the borrowers.”
The new guidelines are aimed at ensuring that there is no misuse of personal data of the borrower like photos, contacts etc.
Privacy Policy and Cyber Security Policy
In order to collect personal information of borrowers, the lending service providers or loan app should make their privacy policy publicly available as per RBI guidelines.
The regulator says that banks and NBFCs should also ensure that the lending service providers comply with various technology standards or requirements on cyber security prescribed by the RBI and other agencies, or as specified for digital lending, from time to time. can go. It aims to protect the data of borrowers and prevent misuse.