DLAI, The Industry Body for Digital Lenders and Fintech Cos, Inks MoU with SIDBI and Releases New Code of Conduct

SIDBI CMD Released Digital Lenders Association of India’s (DLAI) Industry Code of Conduct

Framework for Driving Faster Digital Adoption for catalysing financial inclusion and Streamline Direct Lending Collaborations for DLAI members

The Digital Lenders Association of India (DLAI) and the Small Industries Development Bank of India (SIDBI) recently announced that they have formally signed an MoU to propel the growth of the fintech sector in the country. Mr. Sivasubramanian Ramann, CMD SIDBI, also released DLAI’s latest version of the Industry Code of Conduct (CoC) document at the UnConclave 2023 organised by DLAI in Goa on September 23, 2023. The event was attended by the top 100 executives of the Indian fintech industry.

The new version of CoC is structured around the RBI’s Digital Lending Guidelines and takes into account important aspects such as Responsible Lending, Transparency, Fair Debt Collection Practices, Data Privacy and Security, Compliance with Regulatory Framework etc.

Speaking at the occasion, Mr. Ramann, said “High growth in Indian Fintech sector has been driven by best in class Public Digital Infrastructure (PDI) and matured policy support from regulator. It’s for the industry to leverage the Digital lending guidelines of RBI to develop responsible lending practices and the code of conduct prepared by DLAI is an important first step in this direction. We are happy to work with the Industry on other important aspects like standard protocols, customer protection, grievance redressal, etc. to facilitate faster adoption of digital lending. As a part of its business strategy SIDBI is using digital technology and partnerships to directly reach out micro enterprises. SIDBI will explore offering its credit products through the DLAI members.”

The MOU with SIDBI, is to establish a framework for collaboration between DLAI, the members of DLAI and SIDBI. Some of the key highlights of the MoU are as follows:

• Collaborations to Boost Digital Adoption: Collaborating with SIDBI to develop standard protocols to expedite the adoption of digital lending partnerships including alliances between Banks and Lending Service Providers (LSPs), Co-lending collaborations, developing model partnership agreements, etc.
• Enhancing Public Good Interventions: SIDBI to consider support to DLAI to recommend significant public good interventions in areas such as client protection, customer Grievance redressal mechanism, financial literacy, research and publications, etc.
• Direct Lending Collaborations: SIDBI will explore partnerships for its “Prayaas” Scheme for informal enterprises, co-lending, GST Sahay, Express loan, green financing, etc and other direct credit schemes SIDBI.
• Providing Liquidity for DLAI members: SIDBI shall provide resource support to eligible DLAI member NBFCs and also explore Assignment and Securitization transactions.

Speaking at the MoU announcement, Mr. Jatinder Handoo, CEO, DLAI, shared, “SIDBI is the apex Institution for development of MSME sector in the country. This partnership signifies an important step in India’s fintech journey for enhancing their role in financing to MSME sector. Both organizations are committed to leveraging our combined expertise and resources to pit the sector on high growth trajectory with responsible lending with innovation enbedded therein.”

About Small Industries Development Bank of India (SIDBI):

SIDBI is India's principal financial institution in India for promotion, development and financing of Micro, Small, and Medium Enterprises (MSMEs). SIDBI plays a critical role in supporting entrepreneurship, economic growth, and financial inclusion across the nation though various programs like credit guarantee, direct credit, venture capital, digital platforms, government program management, etc.

About Digital Lenders Association of India (DLAI):

DLAI is a prominent industry body representing digital lenders and fintech companies in India. DLAI is dedicated to promoting responsible lending practices, fostering innovation, and advocating for the interests of its member organizations in the digital lending ecosystem.

For media queries related to DLAI: Ms. Nisha Khetan at nisha@cubicpr.com

Digital Lenders’ Association of India announces the appointment of ex-RBI veteran - Prem Kumar Arora as Director, Policy and Strategy

The announcement was made at the inauguration of the fourth edition of annual DLAI Conclave “Global Digital Transformation-Fintech 2.0”. The three-day virtual Conclave will have 70+ international and national speakers and around 2400 attendees from across the globe.

Mumbai/Bangalore, January 20,2021 : On the opening day of the fourth edition of annual conclave, Digital Lenders’ Association of India (DLAI) today announced the appointment of ex-RBI veteran - Prem Kumar Arora as Director - Policy & Strategy. 

Prem Kumar Arora is an ex- central banker with over 34 years of experience in Regulation and Supervision of Banks with Reserve Bank of India where he retired as Chief General Manager in 2016. Some of his notable projects where he has worked include - The Banking Ombudsman Scheme (2017), Formulation of banking policy for Co-operative banks (2015), Supervision and Licensing of NBFCs (2007) with onsite and off- site supervision of NBFCs.

Post retirement Mr. Arora has been actively engaged in establishment of an Umbrella Organization (UO) for Urban Co-operative Banks in India.

“DLAI members collectively serve more than 4 million borrowers in this country today and have issued loans amounting to nearly $6-7B in the financial year prior to COVID-19 pandemic. Given the sheer size of the industry, Mr. Prem Arora’s appointment will help us navigate through the challenges faced by the industry and will facilitate coordination & communication with the regulators/government bodies to help shape the broad contours of the digital lending landscape.”, said Anurag Jain, president, DLAI & Founder, KredX - India’s largest Bill Discounting Platform.

Keeping in view the larger macroeconomic changes, DLAI has lined up interactive panels, keynotes, round table and interviews in the ongoing virtual conclave to cover changes across the ecosystem that are likely to have an impact on the digital lending industry.

About Mr.Prem Kumar Arora:

Prem Kumar Arora is an ex- central banker with over 34 years of experience in Regulation and Supervision of Banks with Reserve Bank of India.

Some of the notable projects that Mr.Kumar has worked on includes -The Banking Ombudsman scheme (2017), Formulation of banking policy for Co-operative banks (2015), Supervision and Licensing of NBFCs (2007) with onsite and off- site supervision of NBFCs.

Through his working years he has rich experience of coordination and collaboration with the Ministry of finance, Govt Of India for banking policy initiatives. During his tenure some of the other responsibilities that Mr.Kumar has shouldered and are of particular interest for DLAI members are- handling of bank crisis resolution; examination of credit, operational, liquidity and IT risks of banks including business continuity management, financial inclusion and financial literacy.

Digital Lenders Association Issues Stricter Code Of Conduct to Safeguard end customers Privacy of Customers and Unethical Collection Practices take Centre Stage

In recent weeks, Digital Lenders’ Association of India (DLAI) has issued a fresh code of conduct for all its members emphasizing the need to propagate responsible lending practices and to ensure ethical collection practices are in place especially given the challenging macro-economic environment in the country.

This new Code of Conduct is a set of principles, processes and guidelines that are binding on every member of the DLAI in order to ensure ethical and responsible behaviour by all and everyone needs to abide by the same. The purpose of this Code of Conduct is to ensure that the digital lending industry creates common safeguards of customer interests. For examples, the new guidelines make it clear that a lender cannot build unethical features into their products such as excessively high (and non-transparent) late payment fees.

DLAI members collectively serve more than 50 million borrowers in this country. These borrowers are many and varied and comprise those taking education loans, working capital loans and medical loans. DLAI members focus on lending the micro-SME and SME community. Over the last 5 years, the digital lending community has been instrumental in ensuring last-mile credit supply and driving progressive initiatives such as India Stack, to make India a digital-first economy. At this current time, digital lending is even more vital to the economy and offers a safe way to continue credit supply to customers, during this period of social distancing.

A complete lockdown situation has also forced consumers to move to online channels which has resulted in increased adoption of digital lending products, a trend that is expected to accelerate over the coming months as customers will prefer self-serve products they can access at home, over going into a bank or meeting an agent. In addition, many banks (and other traditional lenders) are now looking to partner with digital lenders to increase their digital footprint in future.

India is truly a digital-first economy, and technology can speed up the development of industries and markets with phenomenal success. It can also allow for the rapid growth of unscrupulous practices that can fall between regulatory grey areas. With recent strong growth in the digital lending industry in India, there is a need for industry participants to maintain a strong code of conduct in order to prevent the rise of unscrupulous practices that could cause harm to the industry by reducing the confidence of customers, regulators and other market participants.

The new Code of Conduct includes a number of new provisions, such as those that ensure transparency in pricing and a focus on late payment fees (which some unscrupulous lenders have been known to take to excess). It also provides clear guidance on fair and responsive collections practices such as not calling or threatening to call any family member of the borrower. Implementation of the new Code will be implemented with a strict process for compliance including active focus on training of the employees in the organisations.

With the fresh code of conduct being implemented for all its members, DLAI aims to set a precedent for the entire digital lending industry so that no company can engage in unethical practices.

About Digital Lending Association of India (DLAI)

DLAI is an association of 81 fintech entities, some of which are Systemically Important Non-Deposit taking NBFCs (SI-NBFCs). Our members have collectively disbursed more than Rs 200,000 crores in last five years to more than 50 million urban small borrowers across 1500+ cities / towns in India. Borrower profile of our member institutions vary from micro manufacturing units (textiles, food processing, industrials, engineering, chemicals, healthcare etc) to very small mom and pop stores (kirana stores, restaurants, hardware shops, scrap dealers etc). On the retail side, our members lend to employees of non-rated corporates as well as self-employed professionals for medical emergencies, education, marriage and travel. More than 50% of the borrowers serviced are new-to-credit and have been denied formal credit by traditional financial institutions.