Digital loans must be credited directly in bank accounts: RBI

The RBI on Wednesday mandated that digital loans must be credited directly in the bank accounts of borrowers and not through any third party, as it put in place strict norms to curb rising malpractice in digital lending space.

Besides, the Reserve Bank of India said digital lending entities and not the borrowers should pay fees or charges payable to Lending Service Providers (LSPs) in the credit intermediation process.

Issuing a detailed set of guidelines for digital lending, the RBI mentioned about the concerns primarily related to unbridled engagement of third parties, mis-selling, breach of data privacy, unfair business conduct, charging of exorbitant interest rates, and unethical recovery practices.