Fintech industry bodies, including Digital Lenders Association of India (DLAI) and Fintech Association for Consumer Empowerment (FACE), are gathering inputs from their member firms to discuss and seek clarity from the Reserve Bank of India (RBI), reported The Economic Times.
They will continue consultations on various aspects of First Loss Default Guarantee (FLDG) and Self-Regulatory Organization (SRO) in the digital lending guidelines released by the regulator on Wednesday.
The regulator has barred automatic increase in credit limits. “I am sure in the next few weeks we will see queries emerging from members on what to do with their ongoing FLDG and other partnerships, because there is no clarity on that,” a payment industry insider said on condition of anonymity.
The RBI has given an in-principle approval, as part of the guidelines, to the sector to form an SRO and asked entities to refer to the Master Directions on loan securitisation that allows for 5-10 percent loss guarantee cover.
RBI has also asked banks and non-banks to put in place systems to address consumer grievances within 30 days, and to conduct a thorough due diligence of fintech partners before partnering with them.
“The RBI has not given any implementation timeline for these new guidelines. While the general rule is as soon as possible, bodies will write to the RBI on the timeline as well as seek clarification after collating inputs from members,” a fintech founder who is part of these industry bodies said.
The RBI on Wednesday also brought in operational rules around upfront disclosure of interest rates and other costs, reporting of all loans to bureaus and strict compliance on data collection.