The working group, chaired by RBI Executive Director Jayant Kumar Dash, will consist of both internal and external members, and submit its report within three months.
The internal other members are, Ajay Kumar Choudhary (CGM-in-Charge, Department of Supervision, RBI), P Vasudevan (CGM, Department of Payment and Settlement Systems) and Manoranjan Mishra (CGM, Department of Regulation). The external members are Vikram Mehta(Co-founder, Monexo Fintech) and Rahul Sasi(Cyber Security Expert and Founder of CloudSEK).
Digital lending has the potential to make access to financial products and services more fair, efficient and inclusive. From a peripheral supporting role a few years ago, FinTech led innovation is now at the core of the design, pricing and delivery of financial products and services.
"While penetration of digital methods in the financial sector is a welcome development, the benefits and certain downside risks are often interwoven in such endeavours," the RBI said.
A balanced approach needs to be followed so that the regulatory framework supports innovation while ensuring data security, privacy, confidentiality and consumer protection, it said while setting up the panel.
As per the Terms of Reference (ToR) for the WG, it has been asked evaluate digital lending activities and assess the penetration and standards of outsourced digital lending activities in RBI regulated entities, and "identify risks posed by unregulated digital lending to financial stability, regulated entities and consumers".
The panel has also been asked to suggest regulatory changes, if any, to promote orderly growth of digital lending. It has to recommend measures for expansion of specific regulatory or statutory perimeter and suggest the role of various regulatory and government agencies.
The panel would also be recommending a robust fair practices code for digital lending players and suggesting measures for enhanced consumer protection.
Last month, the Reserve Bank had cautioned the public not to fall prey to the growing number of unauthorised digital lending platforms and mobile apps.
"There have been reports about individuals/small businesses falling prey to growing number of unauthorised digital lending platforms/mobile apps on promises of getting loans in quick and hassle-free manner," it had said.
These reports, it said, also refer to excessive rates of interest and additional hidden charges being demanded from borrowers; adoption of unacceptable and high-handed recovery methods; and misuse of agreements to access data on the mobile phones of the borrowers.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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