RBI flags concerns over non-transparency, violation of norms in digital transactions
Banks and NBFCs, irrespective of whether they lend through their own digital lending platform or through an outsourced lending platform, must adhere to the fair practices code guidelines in letter and spirit, says RBI
- Jun 24, 2020,
- Updated Jun 24, 2020 6:21 PM IST
The Reserve Bank of India (RBI) has raised concerns over non-transparency in transactions and violation of extant guidelines on outsourcing of financial services and fair practices code issued to banks and non-banking finance companies (NBFCs).
In a notification issued on Wednesday, the central bank said that banks and NBFCs, irrespective of whether they lend through their own digital lending platform or through an outsourced lending platform, must adhere to the fair practices code guidelines in letter and spirit. They must also meticulously follow regulatory instructions on outsourcing of financial services and IT services, it said.
The apex bank said that it has observed that the lending platforms tend to portray themselves as lenders without disclosing the name of the bank/ NBFC at the backend, as a consequence of which, customers are not able to access grievance redressal avenues available under the regulatory framework.
In the recent past, there were several complaints against the lending platforms which primarily relate to exorbitant interest rates, non-transparent methods to calculate interest, harsh recovery measures, unauthorised use of personal data and bad behavior, it said.
The Reserve Bank of India (RBI) has raised concerns over non-transparency in transactions and violation of extant guidelines on outsourcing of financial services and fair practices code issued to banks and non-banking finance companies (NBFCs).
In a notification issued on Wednesday, the central bank said that banks and NBFCs, irrespective of whether they lend through their own digital lending platform or through an outsourced lending platform, must adhere to the fair practices code guidelines in letter and spirit. They must also meticulously follow regulatory instructions on outsourcing of financial services and IT services, it said.
The apex bank said that it has observed that the lending platforms tend to portray themselves as lenders without disclosing the name of the bank/ NBFC at the backend, as a consequence of which, customers are not able to access grievance redressal avenues available under the regulatory framework.
In the recent past, there were several complaints against the lending platforms which primarily relate to exorbitant interest rates, non-transparent methods to calculate interest, harsh recovery measures, unauthorised use of personal data and bad behavior, it said.