RBI tightens digital lending norms to prevent charging of exorbitant rates

Companies cannot increase users' credit limits without their explicit consent, says RBI

The Reserve Bank on Wednesday tightened norms for digital lending to prevent charging of exorbitant interest rates by certain entities and also check unethical loan recovery practices.

Under the new norms, all loan disbursals and repayments are required to be executed only between the bank accounts of borrower and the regulated entities (like banks and NBFCs) without any pass-through/ pool account of the Lending Service Providers (LSPs).

Also,"any fees, charges, etc, payable to LSPs in the credit intermediation process shall be paid directly by RE and not by the borrower", the Reserve Bank said in a press release while conveying the regulatory