New Fair Lending Disclosure Guidelines to Enhance Trust Among Stakeholders: Fintech Convergence Council

The Fintech Convergence Council (FCC) welcomes the recent announcement by the Reserve Bank of India (RBI) introducing the Fair Lending Disclosure Guidelines (FLDG). These guidelines mark a pivotal moment in the evolution of the digital lending landscape, and the FCC acknowledges the positive impact they will have on the industry.

The FLDG are set to accelerate digital lending by fintech companies and anticipate a significant surge in funding for digital lending fintech. The digital lending segment witnessed remarkable investment inflows in 2022, and the FLDG will undoubtedly fuel its continued growth.

The FCC recognizes the importance of establishing proper frameworks within the banking sector to ensure compliance with the FLDG. These guidelines will empower banks to implement efficient processes that adhere to the regulatory framework while enabling them to scale their partner-led digital lending initiatives effectively.

Mr. Navin Surya, Chairman, Fintech Convergence Council, said, "The RBI's circular on Default Loss Guarantee arrangements in digital lending reflects their commitment to fostering innovation while ensuring responsible risk management. By conducting extensive consultations and issuing detailed guidelines separately, the RBI establishes a transparent and comprehensive regulatory framework, promoting trust and confidence in the digital lending ecosystem. This move will not only boost credit penetration but also encourage collaboration between fintech and regulated entities for the benefit of the economy."

One key aspect of the FLDG is the emphasis on increased transparency within the lending ecosystem. Lending service providers (LSPs) will now be required to disclose all their relationships and portfolios, including any defaults, to relevant entities (REs). This heightened transparency will foster greater trust among stakeholders and enhance accountability within the industry.

While the guidelines may expose LSP-RE agreements to scrutiny by competitors, the FCC believes that this will encourage healthy competition and drive further improvements in the lending sector. The guidelines offer an opportunity for fintech companies to showcase their capabilities and maintain high standards while ensuring fair lending practices.

The FCC commends the Reserve Bank of India for its proactive approach to implementing the FLDG, which will undoubtedly shape the future of digital lending in India. These guidelines will empower stakeholders to embrace innovation, strengthen partnerships, and foster a transparent and resilient lending ecosystem.

About Fintech Convergence Council

The Fintech Convergence Council (FCC) was formed in 2018 to represent the positions of various regulated financial service providers and fintech companies regarding different issues. The FCC today represents over 100 members coming from different domains of the industry such as digital lending, wealth management, insurance, digital financial service providers, Regtech, Agritech and Bureaus.

The FCC has been at the forefront of public policy advocacy for the above-mentioned domains including the curation of thought leadership content. The council focuses on resolving various sector-specific challenges before the industry and aims at being a platform for all the stakeholders in the financial services (BFSI) ecosystem with an agenda to deliberate pertinent issues, integrate multiple voices and ensure the development of the fintech sector.



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