RBI Releases Draft Guidelines on Aggregation of Digital Loan Products from Multiple Lenders
Moneylife Digital Team 26 April 2024
Reserve Bank of India (RBI) has released draft guidelines for a regulatory framework for the aggregation of loan products by lending service providers to enhance transparency and enable borrowers to have prior information about potential lenders. 
 
RBI says it observed that many of the lending service providers (LSPs) are offering aggregation services for loan products, where an LSP, or a regulated entity (RE) acting as an LSP, has outsourcing arrangements with several lenders and the digital lending app or platform (DLA) of the LSP or RE matches the borrower to one of the lenders. "In such cases, particularly where an LSP has arrangements with multiple lenders, the identity of the potential lender to the borrower may not be known upfront to the borrower."
 
To enable borrowers to have prior information about the potential lenders for making an informed decision, RBI has advised REs to ensure that LSP should provide a digital view of all the loan offers available to the borrower, as per his or her requirements, from all the willing lenders with whom the LSP has arrangements with.
 
"While the LSP may adopt any mechanism to ascertain the willingness of the lenders to offer a loan, it should follow a consistent approach in this regard, which would be disclosed suitably on their website," it says. 
 
According to the draft guidelines, the digital view should include the names of the REs extending the loan offer, the amount and tenure of the loan, the annual percentage rate (APR) and other key terms and conditions in a way which enables the borrower to make a fair comparison between various offers. A link to the key facts statement (KFS) should also be provided for each of the REs.
 
"The content displayed by the LSP should be unbiased and not directly or indirectly promote or push a product of a particular RE, including by use of any practices or deceptive patterns, i.e., using 'dark patterns' designed to mislead borrowers into choosing a particular loan offer," RBI says.
 
RBI says comments or feedback on the draft may be sent by e-mail with the subject line 'Comments on Draft Circular on Digital Lending – Transparency in Aggregation of Loan Products from Multiple Lenders', by 31 May 2024.
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