Skip to main content

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By

 India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.

 

Fintech platforms' business models

The central bank deputy governor highlighted that many fintech platforms' business models involve providing small-value loans to customers with poor credit scores. This has fueled the rise of aggressive recovery strategies, which sometimes cross ethical boundaries.Swaminathan also flagged a concerning practice of invasion of customers' privacy. According to the report, recovery agents access borrowers' personal data and contacts and use them as threats.

 

The deputy governor, quoted in the report, cautioned that these recovery tactics breach the individual's right to privacy and risk damaging the reputation of the regulated lenders associated with the fintech platforms.Swaminathan focused on the RBI's regulations on outsourcing, which state that the regulated entities are accountable for every action taken by their outsourced agents, as per the report.The digitisation step allows banks and non-banking financial companies (NBFCs) to leverage the data for more insights into their customer needs and behaviours, which can be used to make tailor-made products aside from better risk management and compliance, according to the report.RBI's role as a regulator is to provide guidelines and frameworks that encourage innovation and manage risks effectively. The primary goal of RBI, reported the agency, quoting the deputy governor, is to ensure the stability and integrity of the system and not to affect business operations.

 

-Live Mint 03rd September, 2024.

Comments

Post a Comment

Popular posts from this blog

Data storage norm splits digital payments industry

By
Data storage norm splits digital payments industry  India’s nascent digital payment industry could be thrown into disarray due to the demand by the Reserve Bank of India (RBI) that all user data be stored within the country, fears an industry grouping, which has termed the decision as “heavy-handed”, even as others, including the country’s largest digital payment provider Paytm, have hailed the move.  In a bid to narrow the growing schism, the industry is planning to send a formal representation to the regulator highlighting its concerns, a top official told ET.  “We are trying to build a consensus on the issue," said the person adding that the representation to the central bank will be ready this week.  RBI on April 6, mandated all payment companies—global and local—to set up data storage facilities within India by October. The stringent six-month deadline has attracted the ire of several sections of the industry that fear it will lead to a disruption of wel...
18 comments
Read more

Offer’s for all of you

By
Great Bumper Dhamaka Offer’s for all of you... It's Time to see your Business Online, WebeCreator Offer Website Designing with domain & Email @ nominal charges. For a year For More information visit us http://goo.gl/KlpppF call on 9890151261/9773197533  drop a mail to sales@webecreator.com
Post a Comment
Read more

Sebi to finalise options in commodities today

By
The Commodity Derivatives Advisory Committee of the Securities and Exchange Board of India ( Sebi) will meet on Friday with senior officials of the latter, to give a final shape to the rules on options trading in commodity futures, beside revising the warehousing norms to ensure good delivery on settlement. The decision taken, after discussing with the advisory committee, will be placed before the regulator’s board, to finalise the regulations. According to knowledgeable sources, three commodities in each segment, agricultural and non- agricultural, have been proposed for introducing options. It appears commodities from the soya and guar segments are preferred in the former. From the non- agri segment, it is likely that gold, silver and crude oil will be finalised. All these These have better liquidity and both the National Commodity and Derivatives Exchange and the Multi Commodity Exchange, respectively, will be able to introduce the options. In the equity segments, options ar...
17 comments
Read more