Page 54 - Banking Finance July 2020

RBI CIRCULAR

Thus banks and NBFCs are observed to lend either digital lending platforms as their agents to source
directly through their own digital platforms or through borrowers and/ or to recover dues, they must follow
a digital lending platform under an outsourcing the following instructions:
arrangement. a) Names of digital lending platforms engaged as
2. It has further been observed that the lending platforms agents shall be disclosed on the website of banks/
tend to portray themselves as lenders without disclosing NBFCs.
the name of the bank/ NBFC at the backend, as a b) Digital lending platforms engaged as agents shall
consequence of which, customers are not able to access be directed to disclose upfront to the customer,
grievance redressal avenues available under the the name of the bank/ NBFC on whose behalf they
regulatory framework. Of late, there are several are interacting with him.
complaints against the lending platforms which c) Immediately after sanction but before execution
primarily relate to exorbitant interest rates, non-
of the loan agreement, the sanction letter shall be
transparent methods to calculate interest, harsh issued to the borrower on the letter head of the
recovery measures, unauthorised use of personal data bank/ NBFC concerned.
and bad behavior.
d) A copy of the loan agreement along with a copy
3. Although digital delivery in credit intermediation is a each of all enclosures quoted in the loan
welcome development, concerns emanate from non- agreement shall be furnished to all borrowers at
transparency of transactions and violation of extant the time of sanction/ disbursement of loans.
guidelines on outsourcing of financial services and Fair
Practices Code, etc. issued to banks and NBFCs, a e) Effective oversight and monitoring shall be
reference to which is drawn in the Annex. It is, ensured over the digital lending platforms engaged
therefore, reiterated that banks and NBFCs, by the banks/ NBFCs.
irrespective of whether they lend through their own f) Adequate efforts shall be made towards creation
digital lending platform or through an outsourced of awareness about the grievance redressal
lending platform, must adhere to the Fair Practices mechanism.
Code guidelines in letter and spirit. They must also 5. Any violation in this regard by banks and NBFCs
meticulously follow regulatory instructions on (including NBFCs registered to operate on ‘digital-only’
outsourcing of financial services and IT services.
or on digital and brick-mortar channels of delivery of
4. It must be noted that outsourcing of any activity by credit) will be viewed seriously.
banks/ NBFCs does not diminish their obligations, as the
onus of compliance with regulatory instructions rests (Manoranjan Mishra)
solely with them. Wherever banks and NBFCs engage Chief General Manager

54 | 2020 | JULY | BANKING FINANCE