BENGALURU (Reuters) - The Reserve Bank of India (RBI) has given lenders until the end of November to put in place systems and processes to ensure existing digital loans are in compliance with the regulator's rules issued last month.
The RBI in August charted detailed guidelines that would increase scrutiny and supervision over digital lending apps and lenders who engage with them, after several complaints of malpractice against.
The central bank has mandated that all digital loans will have to be credited directly to borrower accounts rather than through a third party. Some categories such as co-lending arrangements and loans for specific end-uses are exempt from the new rules.
Arrangements where non-banks took on a part of the risk of digital loans have been effectively brought to an end.
The rules are applicable to new customers as well as existing customers availing new loans, the RBI said in a notification on Friday. (https://bityl.co/EAIM)
The central bank advised lenders to ensure that service providers and digital apps associated with them comply with the guidelines.
(Reporting by Chris Thomas in Bengaluru; Editing by Andrew Cawthorne)