Context:
Reserve Bank of India (Digital Lending) Directions, 2025 Issued by RBI
Key Highlights:
- Digital lending refers to a remote and automated lending process, using technology for customer acquisition, credit assessment, loan approval, disbursement, and recovery.
- Applicable Entities – Regulated entities covered under these directions include:
- Commercial Banks
- Primary (Urban)/State/Central Co-operative Banks
- Non-Banking Financial Companies (NBFCs), including Housing Finance Companies
- All-India Financial Institutions
- Digital Lending Apps (DLAs) & Transparency Measures – Mandatory reporting of DLAs via the RBI’s Centralized Information Management System (CIMS) portal, creating a public directory of legitimate DLAs.
- Enhanced Due Diligence – Financial entities must verify:
- Technical capabilities of Lending Service Providers (LSPs)
- Data privacy and security measures
- Borrower conduct and regulatory compliance
- Role of Lending Service Providers (LSPs) – LSPs act as agents of financial entities, managing digital lending operations on their behalf
- Disclosures & Borrower Protections – Financial entities and LSPs must provide full transparency on key details such as terms, conditions, privacy policies, ensuring borrowers make informed decisions
- Grievance Redressal Mechanism – LSPs must appoint a Grievance Redressal Officer to handle digital lending-related complaints and issues.
Source: RBI
Previous Year Question
If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do?
1. Cut and optimize the Statutory Liquidity Ratio
2. Increase the Marginal Standing Facility Rate
3. Cut the Bank Rate and Repo Rate
Select the correct answer using the code given below:
[UPSC Civil Service Exam – 2020 Prelims]
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: (b)