For better digital lending, Reserve bank of India must arm itself with necessary technology and technical expertise to track lending applications. Examine (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· It is critical digital apps continue to lend so, since penetration of formal finance in the country is abysmally low and, by one estimate, is probably less than 10% of the demand.
· RBI’s working group has done well to recommend the creation of a nodal agency to verify the technological credentials of all lending apps and also dedicated legislation to curb illegal lending.
· The disbursements and repayments must be made directly into the bank accounts of borrowers and lenders so that there is a proper trail of transactions.
· If prepaid instruments are used, these must be preceded by proper know your customer (KYC) processes.
· Importantly, lending by regulated entities (REs) through lending apps must be reported to credit bureaus; there needs to be a record of credit flows.
· The working group has done well to say that all data must be stored in servers in India. That is a justified requirement given the enormous value of the information being gathered by these lenders.
· The several instances of lenders using coercive tactics to recover loans may also have prompted such detailed guidelines.
· It is now up to digital apps to play by the rules and self-regulate themselves. As the universe of fintech grows, RBI must arm itself with the necessary technology and technical expertise needed to track lending apps on a real-time basis.
Manish 3 years
Please Review !
IAS Parliament 3 years
Try to include challenges in digital lending. Keep Writing.
Pooja 3 years
Please review
IAS Parliament 3 years
Mainpart of the answer is good, try to provide a comprehensive conclusion. Keep Writing.
K. V. A 3 years
Pls review
IAS Parliament 3 years
Try to discuss the challenges in digital lending. Keep Writing.
RAJA MOHAMED 3 years
Please Evaluate
IAS Parliament 3 years
Good attempt. Keep Writing.