RBI to control online loan aggregators

As part of its initiatives to improve lending sector transparency, the RBI (Reserve Bank of India) plans to regulate digital loan aggregators. The web aggregators present loan offers from various lenders on an electronic platform; borrowers can then pick and choose the best available loan option.

The action was taken in response to complaints regarding excessive interest rates and unethical recovery practices by some internet lenders. There are hundreds of unauthorised digital lenders which are outside the RBI’s purview.

The regulatory framework will mainly target organizations under RBI regulation as well as loan service providers connected to them.

“As regards entities falling in the second category, the respective regulator or controlling authority may consider formulating or enacting appropriate rules and regulations on digital lending based on the recommendations of WGDL (working group on digital lending). For the entities in the third category, the WGDL has suggested specific legislative and institutional interventions for consideration by the Central Government to curb the illegitimate lending activity being carried out by such entities,” the RBI said.