As per RBI’s announcement on Friday, regulated entities involved in credit delivery through digital lending have until November 30 to comply with the new lending standards.
It was clarified in a notification by the central bank that the norms, released in a circular dated August 10, will be applicable to existing customers seeking new loans as well as to new customers signing up following the release of the circular.
“However, in order to ensure a smooth transition, REs shall be given time till November 30, 2022, to put in place adequate systems and processes to ensure that ‘existing digital loans’ (sanctioned as on the date of the circular) are also in compliance with these guidelines in both letter and spirit,” said the RBI.
The regulator reiterated that outsourcing arrangements entered into by REs with a lending service provider (LSP) or digital lending app (DLA) do not diminish the REs’ obligations and they shall continue to conform to existing guidelines on outsourcing. A directive was issued to REs to ensure that LSPs and DLAs engaged by them comply with the guidelines.
According to the August 10 guidelines, REs are required to ensure that all loan servicing and repayments are made directly into the RE’s account without the use of a pass-through account or pool account of a third party. Additionally, REs must ensure that no disbursements are made to third-party accounts, including those of LSPs and their DLAs.