RBI’s new digital lending framework: Comply now or pay later

RBI’s new digital lending framework: Comply now or pay later

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Pratik Bhakta

158 reads
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Pratik Bhakta

158 reads

RBI’s new digital lending guidelines show that the regulator wants lending to be done by regulated entities only. Unregulated fintechs must either become NBFCs or be relegated to the status of severely restricted service providers

August 12, 2022

8 MINS READ

The Reserve Bank of India’s (RBI) newly released digital lending guidelines have made one thing very clear—startups operating in the digital lending space must bear an increased cost of compliance and refrain from taking any regulatory shortcuts.

The silver lining for the industry is that the banking regulator did not take drastic action the way it did in its June 20 note. As The CapTable reported at the time, that move effectively disallowed fintechs from using credit lines to load prepaid payment instruments (PPI) such as mobile or digital wallets.

But while the new guidelines don’t go quite so far, some of RBI’s digital lending diktats will definitely change the scope of operations for fintechs that have thus far skirted regulatory oversight.

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