RBI Latest News: Lending service providers on online (web) platforms collect loan offers from multiple lenders. This gives people wishing to take a loan a chance to choose a better offer after comparing between different offers.
The Reserve Bank of India (RBI) has taken a big step to protect the interest of borrowers. The RBI on Friday released the draft regulatory framework for loan products of lending service providers. The bank regulator believes that this step will increase transparency among the borrowers. According to an RBI release, this framework aims to promote transparency in the credit intermediation process with a customer-centric perspective. Lending service providers are third-party entities affiliated to a regulated financial firm for credit intermediation activities.
Lending service providers on online (web) platforms collect loan offers from multiple lenders. This gives people wishing to take a loan a chance to choose a better offer after comparing between different offers. The RBI noted that many providers offer aggregation services for loan products. “In cases where a lending service provider has relationships with multiple lenders, the borrower is less likely to know the identity of the prospective lender,” the central bank said.
According to the draft circular, the regulated entities will have to ensure –
- The lender service providers will provide all the loan offers available on the app or website to the loan aspirants. This will be done by all interested lenders (banks or NBFCs) with whom the LSP has a relationship.
- LSPs should follow a cogent approach to ascertain lenders’ willingness to avail loans and disclose the same on their website.
- The app or website should name the regulated entities, which tell about the loan offer, amount and tenure of the loan and annual percentage rate. It should be backed along with all other terms and conditions and presented in a manner that helps the borrower to make a fair comparison between different lenders.
- In addition, a link to a key fact statement should be provided in respect of each of the regulated entities.
