Mumbai: The Reserve Bank of India (RBI) on Friday proposed that loan service providers (LSPs) acting as agents of banks should provide information to borrowers about all loan offers available with them so that they can take an informed decision.
Many LSPs provide aggregation services for loan products.
An LSP is an agent of a regulated entity (RE) that performs the functions of one or more lenders in the loan portfolio on behalf of the RE in customer acquisition, underwriting support, pricing support, servicing, monitoring, recovery or conformance of specific loans. Completes the part. With existing outsourcing guidelines.
In December last year, the RBI had announced the release of a draft framework stating that lending or borrowing to persons who are in a position to control or influence the decision of the lender may be a matter of concern. That is, if the lender does not maintain an arm's length relationship with such people.borrower
It said such lending could involve moral hazard issues, leading to compromises in pricing and credit management.
“In such cases, particularly where an LSP has made arrangements with multiple lenders, the identity of the potential lender may not be known to the borrower in advance,” said the Reserve Bank of India’s draft on ‘Digital Lending – Transparency in Aggregation of Loans’. Said in the circular. Products from multiple lenders.
The draft proposed that LSPs should provide a digital view of all loan offers available to the borrower as per his requirements, from all interested lenders with whom the LSP has arrangements.
“While LSPs may adopt any mechanism to gauge the willingness of lenders to lend, they shall have to follow a consistent approach in this regard, which should be appropriately disclosed on their website,” the draft said. Will go.'' Stakeholders by May 31.
The digital view should include the name of the RE extending the LOA offer, loan amount and tenure, Annual Percentage Rate (APR) and other terms and conditions that enable the borrower to avail the loan. Make a comparison between different proposals, the draft said.
In September 2022, the RBI had issued “Guidelines on Digital Lending” with a focus on “customer centricity” and ensuring complete transparency for the borrower in the credit intermediation process.
Many LSPs provide aggregation services for loan products.
An LSP is an agent of a regulated entity (RE) that performs the functions of one or more lenders in the loan portfolio on behalf of the RE in customer acquisition, underwriting support, pricing support, servicing, monitoring, recovery or conformance of specific loans. Completes the part. With existing outsourcing guidelines.
In December last year, the RBI had announced the release of a draft framework stating that lending or borrowing to persons who are in a position to control or influence the decision of the lender may be a matter of concern. That is, if the lender does not maintain an arm's length relationship with such people.borrower
It said such lending could involve moral hazard issues, leading to compromises in pricing and credit management.
“In such cases, particularly where an LSP has made arrangements with multiple lenders, the identity of the potential lender may not be known to the borrower in advance,” said the Reserve Bank of India’s draft on ‘Digital Lending – Transparency in Aggregation of Loans’. Said in the circular. Products from multiple lenders.
The draft proposed that LSPs should provide a digital view of all loan offers available to the borrower as per his requirements, from all interested lenders with whom the LSP has arrangements.
“While LSPs may adopt any mechanism to gauge the willingness of lenders to lend, they shall have to follow a consistent approach in this regard, which should be appropriately disclosed on their website,” the draft said. Will go.'' Stakeholders by May 31.
The digital view should include the name of the RE extending the LOA offer, loan amount and tenure, Annual Percentage Rate (APR) and other terms and conditions that enable the borrower to avail the loan. Make a comparison between different proposals, the draft said.
In September 2022, the RBI had issued “Guidelines on Digital Lending” with a focus on “customer centricity” and ensuring complete transparency for the borrower in the credit intermediation process.
