Industry body Fintech Association for Consumer Empowerment (FACE) on Thursday said that it has applied to the Reserve Bank of India (RBI) to take on the role of a self-regulatory organisation (SRO) in the digital lending industry.
The report of the RBI working group on digital lending, released on November 18, recommended, among other things, the constitution of an SRO covering the participants in the digital lending ecosystem.
Member companies of FACE cater to more than half of the consumer lending market volumes in India and serve a cumulative consumer base of over 90 lakh consumers across 19,000 pin codes, the association said. Another industry body, Digital Lenders’ Association of India, which has over 80 members with $5-6 billion in annual disbursements, is also active in the space.
FACE said that its application comes on the back of the RBI seeking suggestions from industry groups to enforce regulations for digital lending platforms in the country, in an effort to curb illegal lending apps. Ram Rastogi, governance council member, Face, said that the organisation intends to work with the RBI and all official stakeholders to promote responsible lending, which will uphold ethical lending practices, data security, cyber security, consumer privacy and to weed out predatory lenders. “With our expertise and collective addressable market, we believe FACE is well prepared to take on the task of a formal self-regulatory body, that can promote and refine practices and streamline the sector, with guidance from the RBI,” Rastogi said.
The working group report distinguished balance sheet lenders in the digital ecosystem from loan service providers (LSPs) who facilitate the delivery of loans for balance sheet lenders. It recommended that the appointed SRO will have to lay down a uniform model on the basis of which the LSP agreement for balance sheet lenders will be framed. The SRO will be responsible for laying down a code of conduct on the basis of which lending apps will have to base their advertising and marketing strategy, as also the loan agreement format to be used by lending apps.