Indian businessman and co-founder of BharatPe, Ashneer Grover took to Twitter on Monday to state his views about the ‘Guidelines for digital lending’ released by the Reserve Bank of India a few days ago.
Ashneer Grover wrote on Twitter that the new guidelines issued by the central bank were one of the worst in the world. He also stated that the new guidelines will discourage fintech firms from taking part in lending activities.
If the introduction and implementation of UPI was one of the best tech innovations in the world, the regulatory guidelines for digital lending are the worst in the world, Mr Grover said.
If UPI is the best tech / regulatory innovation in the world, the RBI’s Digital Lending Guidelines have to be the worst. Essentially RBI is telling Fintechs ‘Bhai mat karo digital lending shending ! Banks se hoti nahi, humein samajh aati nahi, aur pen paper ki sale bhi kam hogi’
According to Ashneer Grover, the new guidelines are indirectly stating that fintech firms should not take part in digital lending as banks haven’t been successful and RBI still has not understood its working.
The guidelines for digital lending were issued by the Reserve Bank of India as a notification for all commercial banks, cooperative banks and NBFC companies.
The guideline stated that Regulated Entities (REs) should disclose the Annual Percentage Rate (overall cost of loan payable by Borrower annually) beforehand and that it should also be part of the key fact statement. A key fact statement is a document which contains all necessary and significant information about the loan product.
RBI also stated that both REs and lending service providers must have a nodal grievance redressal officer. This grievance redressal officer is supposed to look into all complaints raised by borrowers concerning Fintech firms or the digital lending process.
Several other regulatory guidelines similar to the ones stated above are also part of the guidelines released by RBI. The majority of the guidelines are focussed on protecting borrowers from fraud and misappropriation.
RBI has also taken into consideration the importance of data privacy and has devised guidelines which will ensure the protection of personal and financial data of customers.
Chief Executive Officer and co-founder of Biz2Credit said that the new guidelines on digital lending might negatively impact the level of trust in public towards the digital lending and digital credit products.
Rachut Chawla who is the chief executive officer of Finway FSC has a different opinion about the new guidelines. According to Rachut the new guidelines will make the entire process of digital lending and borrowing more transparent. Borrowers will be safe while borrowing digitally with the new guidelines. It will also ensure that lesser people go to illegal lending apps and online sites which use predatory and illegal mechanisms to lend digitally.