RBI Proposes Digital Transparency in Loan Offers from Multiple Lenders

On 26th April, 2024, the Reserve Bank of India (RBI) introduced a draft guideline aimed at enhancing transparency in digital lending by urging lending service providers (LSPs) to share comprehensive information about loan offers from various lenders with borrowers.

Key Points

Objective of the Proposal: The RBI's draft guideline aims to ensure that borrowers have access to a digital view of all available loan offers from willing lenders, facilitating informed decision-making.
Requirement for LSPs: Lending service providers are proposed to provide borrowers with a digital overview of loan offers, including details such as the lender's name, loan amount, tenor, annual percentage rate (APR), and other key terms.
Enhancing Borrower Comparison: By presenting comprehensive information, borrowers can make fair comparisons among different loan offers, enabling them to choose the most suitable option.
Inclusion of Key Facts Statement (KFS): The draft guideline mandates LSPs to include a link to the key facts statement (KFS) for each lender, ensuring transparency and providing borrowers with essential details.
Promotion Restrictions: LSPs are prohibited from promoting or favoring specific products of particular regulated entities (REs), emphasizing the need for unbiased content.
Aim for Fair Practices: The RBI's proposal aims to promote fair practices in digital lending by ensuring transparency, accessibility, and consumer protection.