The Reserve Bank of India issued guidelines for digital lending platforms to ensure orderly growth and protect borrowers in response to complaints that lending apps were charging usurious interest rates, pursuing aggressive recovery practises, and engaging in fraud and data privacy violations.
The guidelines, which apply solely to RBI-regulated businesses and lending service providers, require them to disclose the whole cost of digital loans to borrowers and prohibit lenders from extending credit limits automatically without the borrower’s approval.