RBI proposes draft guidelines for web aggregators of loan products

RBI draft regulations: The Reserve Bank of India (RBI), has unveiled draft guidelines aimed at establishing a regulatory framework for web aggregators of loan products. The move is intended to enhance transparency and provide borrowers with prior information about potential lenders.

Under the proposed framework, lending service providers (LSPs) - entities engaged by banks or non-banking finance companies (NBFCs) to perform various functions such as customer acquisition, underwriting, and loan recovery on digital platforms - will be subject to regulatory oversight.

Key provisions of the draft guidelines include ensuring that LSPs offer a comprehensive digital view of all loan offers available to borrowers from the lenders they have arrangements with. This view should include essential details such as the lender's name, loan amount and tenor, annual percentage rate, and other terms and conditions to facilitate fair comparisons between different offers.

While LSPs are given flexibility in determining lenders' willingness to offer loans, the RBI emphasizes the importance of adopting a consistent approach, which must be transparently disclosed on their websites. Additionally, LSPs are required to provide a link to the key facts statement (KFS) for each regulated entity.

Importantly, the content displayed by LSPs must be unbiased and should not favour or promote any specific lender's products. The RBI prohibits the use of deceptive practices or patterns aimed at misleading borrowers into selecting a particular loan offer.

Stakeholders have been invited to provide feedback on the draft circular, with comments accepted until May 31.

The proposed guidelines signify the RBI's commitment to fostering transparency and consumer protection in the lending ecosystem, ensuring that borrowers have access to clear and accurate information when making financial decisions.

(With Reuters inputs)