RBI issues new guidelines for loan service providers to ensure transparency in multi-lender loan offers
The
Reserve Bank of India
(RBI) on Thursday issued guidelines for loan arrangements between entities under its regulation and
loan service providers
(LSPs). These guidelines specifically address cases involving multiple lenders.
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When an LSP has agreements with several banks and non-banking financial companies (NBFCs), the service provider must ensure that a digital interface is available, displaying all loan offers that match the borrower's requirements, RBI said. This digital display should also highlight the lenders whose offers do not match the borrower's request.
The regulator also said that LSPs must maintain a consistent approach across all loan offerings. The digital interface will need to include key details such as the names of the banks or NBFCs providing the loans, the loan amount, tenure, annual percentage rate (APR), monthly repayment obligations, and any applicable penal charges. According to the RBI, this will help borrowers make an informed and fair comparison between various loan offers.
"Transparency and disclosures around multiple loan offers will enable borrowers to evaluate all options and access credit products that best suit their needs," said Shilpa Mankar Ahluwalia, Partner, Head-Fintech, Shardul Amarchand Mangaldas & Co. "RBI will also maintain a database for digital lending apps which will be publicly accessible. The public database is a measure that has been in discussion for a while and once implemented, will be an important step in curbing unauthorised or fraudulent applications.
RBI emphasised that the content presented by the loan service provider should be impartial, objective, and must not favor or promote the products of any specific regulated entity. The use of misleading tactics, such as dark patterns designed to sway borrowers toward a particular loan offer, is prohibited, the RBI said.
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