Reserve Bank of India (RBI) has issued fresh guidelines under the Digital Lending Directions, 2025 to regulate the digital lending ecosystem. The move is aimed at curbing malpractice, improving borrower protection, and ensuring transparency and accountability in the sector.
Key Objectives of New Directions
- Establish uniform regulatory standards across digital lending platforms.
- Protect borrowers from hidden charges and unethical practices.
- Promote transparency, accountability, and data security in digital lending.
Major Provisions Under RBI Digital Lending Directions, 2025
Mandatory Reporting on CIMS Portal
- All Regulated Entities (REs) must upload details of their Digital Lending Apps (DLAs) on the RBI’s Centralised Information Management System (CIMS).
- Timeline:
- Portal Live Date: May 13, 2025
- Deadline for REs to Submit Initial Data: June 15, 2025
Public Directory of DLAs
- RBI will publish a public directory of DLAs by July 1, 2025 on its official website.
- Purpose: Allows users to verify whether a lending app is linked to an RBI-regulated lender.
- The list will be published “as-is” (RBI won’t validate uploaded data).
- It will update automatically when REs add or remove apps.
Loan Aggregation Transparency Norms
- Lending Service Providers (LSPs) working with multiple REs must:
- Display a digital view of all loan offers available to a borrower.
- Include even unmatched loan offers and disclose the names of all associated lenders.
- Borrowers should be able to compare and choose from multiple loan options transparently.
Stricter Due Diligence for LSPs and Third Parties
- REs must evaluate LSPs and other third parties on:
- Technical capability
- Data privacy compliance
- Data storage and cybersecurity practices
- This vetting is mandatory before any formal engagement.
Why This Matters?
- The digital lending market has seen exponential growth, but has also been marred by:
- Hidden charges
- Aggressive recovery tactics
- Unregulated, fly-by-night apps
- The new framework aims to:
- Clean up the ecosystem
- Prevent borrower exploitation
- Strengthen trust in RBI-regulated digital finance
Significance of Move
- Promotes responsible lending practices.
- Empowers borrowers with access to verified apps and transparency in loan offers.
- Helps prevent misuse of fintech platforms for predatory lending.
- Reinforces RBI’s role as a regulator ensuring ethical fintech operations.
What’s Next?
- REs must comply with DLA reporting norms by June 15.
- Borrowers will soon be able to check an app’s legitimacy through the RBI public directory (from July 1).
- LSPs need to redesign user interfaces to display all loan offers and ensure compliance with new aggregation rules.