60 Seconds Mein Loan
After the Covid-19 outbreak, when individuals lost their jobs and were looking for rapid loan applications that may provide them with money, the threat posed by NBFCs or digital lending or loan apps intensified in India. These borrowers not only ended up repaying more than they borrowed, but many also suffered online harassment, threats, and psychological harm.
RBI’s stance on the whole issue
The RBI has established new regulations for these NBFCs or instant digital lending applications in response to an increase in incidences of digital fraud and unethical recovery tactics. According to the new regulations, regulated organisations (REs) are prohibited from reading or scanning borrowers’ cellphones but are expected to disclose all fees upfront in a digital loan product to the consumer. Additionally, all loan disbursements and repayments must now be carried out only between the bank accounts of the borrowers and the RE, without the involvement of the lending service provider’s (LSP) pass-through or pool accounts, or those of any other third parties. Furthermore, the RE, not the borrower, shall pay any fees or charges due to LSPs during the credit intermediation procedure.
Impact on Fintech Industry
The new rules and regulations will significantly affect the fintech sector since they will raise operating and compliance processes and expenses. While India is at the cusp of the Fintech revolution, these regulations may slow down the growth of ethical firms and neo banks who wish to venture out into a similar domain. The need to go digital with finances during the COVID induced lockdown was a blessing in disguise for the FinTech industry to enable greater adoption of digital financial services, converting the skeptical consumer base. These instances might affect the overall ‘trustworthiness’ of even the legit players, affecting the overall growth of the sector…
What can we do?
As Public Relations professionals, we will need to approach our communications plan with caution and we must reestablish trust, and credibility amongst the customer base. Another key aspect is to communicate the competitiveness and compliance assurance of the technology behind the digital financial providers. Lastly, rehashing the security of data and interest of consumers at heart of these organizations is what will set them apart from the clutter and set the path of ‘Future of FinTech’ in the country.