RBI Proposes Digital Transparency in Loan Offers from Multiple Lenders

• 30 Apr 2024

On 26th April, 2024, the Reserve Bank of India (RBI) introduced a draft guideline aimed at enhancing transparency in digital lending by urging lending service providers (LSPs) to share comprehensive information about loan offers from various lenders with borrowers.

Key Points

• Objective of the Proposal: The RBI's draft guideline aims to ensure that borrowers have access to a digital view of all available loan offers from willing lenders, facilitating informed decision-making.
• Requirement for LSPs: Lending service providers are proposed to provide borrowers with a digital overview of loan offers, including details such as the lender's name, loan amount, tenor, annual percentage rate (APR), and other key terms.
• Enhancing Borrower Comparison: By presenting comprehensive information, borrowers can make fair comparisons among different loan offers, enabling them to choose the most suitable option.
• Inclusion of Key Facts Statement (KFS): The draft guideline mandates LSPs to include a link to the key facts statement (KFS) for each lender, ensuring transparency and providing borrowers with essential details.
• Promotion Restrictions: LSPs are prohibited from promoting or favoring specific products of particular regulated entities (REs), emphasizing the need for unbiased content.
• Aim for Fair Practices: The RBI's proposal aims to promote fair practices in digital lending by ensuring transparency, accessibility, and consumer protection.