RBI Issues Draft Guidelines on Digital Lending Platforms

The Reserve Bank of India (RBI) has released draft guidelines to regulate digital lending platforms, aiming to strengthen borrower protection and curb unfair and predatory lending practices in the rapidly expanding fintech ecosystem. The proposed norms seek to enhance transparency, accountability and consumer confidence in digital credit markets.

A key feature of the draft guidelines is the requirement for greater transparency in interest rates, fees and charges. Digital lending platforms will be mandated to clearly disclose the annual percentage rate (APR), including all costs associated with a loan, to ensure that borrowers are fully informed before availing credit. Hidden charges and misleading advertisements are sought to be eliminated through stricter disclosure norms.

The RBI has also placed strong emphasis on data privacy and security. Lending platforms will be required to collect only essential borrower data with explicit consent and ensure that personal information is not misused or shared with third parties without authorisation. The guidelines aim to address concerns over invasive data practices, unauthorised access to contacts and coercive recovery methods.

Another important aspect of the draft norms is the strengthening of grievance redress mechanisms. Digital lenders will need to establish effective customer support systems, appoint grievance redress officers and adhere to defined timelines for complaint resolution. Borrowers must also be informed about escalation channels, including the RBI’s Integrated Ombudsman Scheme.

The draft guidelines clarify the responsibilities of regulated entities, such as banks and non-banking financial companies (NBFCs), in partnerships with fintech firms. Regulated lenders will remain fully accountable for loans originated through digital platforms, ensuring regulatory oversight and consumer protection.

The RBI has invited public and stakeholder feedback on the draft norms before finalisation. Experts have welcomed the move, noting that clear regulatory guardrails are essential to balance innovation with consumer protection. Once implemented, the guidelines are expected to foster a safer, more transparent and responsible digital lending ecosystem in India.