BIG NEWS: RBI's New Rules! RBI will implement new guidelines for businesses providing loans via digital platforms; see details

 BIG NEWS: RBI's New Rules! RBI will implement new guidelines for businesses providing loans via digital platforms; see details

BIG NEWS: RBI's New Rules! RBI will implement new guidelines for businesses providing loans via digital platforms; see details

Governor of the Reserve Bank of India (RBI), Shaktikanta Das, made the announcement on Friday, December 8, that a new framework is being developed for businesses who provide loans via digital platforms.

For the time being, it seems that the protracted debate over regulations pertaining to digital lending firms and unsecured personal loans is coming to a conclusion. Governor of the Reserve Bank of India (RBI), Shaktikanta Das, made the announcement on Friday, December 8, that a new framework is being developed for businesses who provide loans via digital platforms. Das said that he will launch a fintech repository shortly.

He went on to say that financial institutions and fintech are collaborating, and that this move would increase transparency in the process of granting digital loans. According to Das, the RBI has made the decision to provide all regulated enterprises (REs) with a single regulatory framework for linked lending. Additionally, this will make loan pricing for all REs stronger.

Unsecured loans come with an increased risk.

Prior to this, the RBI had lately put preventative measures in place to avoid financial hazards. The governor of the RBI has advised the banks to do stress tests and to restrict unsecured lending during that period. The quantity of unsecured loans has sharply increased recently. Because of this, the risk factor had considerably grown, necessitating the implementation of higher interest rates.

Additionally, in November, the RBI introduced tougher guidelines in the form of increased capital requirements for credit cards and personal loans. The new regulations include a 25 percentage point increase in risk weight for banks and NBFCs, meaning that each loan that is made will need more capital.

RBI raised the risk of obesity

The risk weight on retail loans, which include credit card loans and personal loans, has climbed from 100% to 125% over this time. In addition, the risk weight for credit card exposure has been raised by the RBI by 25 percentage points, to 150% for banks and 125% for NBFCs.

The updated risk weight rules no longer apply to several loans, including those for homes, schooling, vehicles, and gold or jewelry-secured loans. The RBI took this action in response to concerns expressed about the sharp rise in unsecured loans.