[ad_1]
GS Paper 3:
Topics Covered: Cyber security related issues.
Context:
A Reserve Bank of India (RBI) Working Group (WG) on digital lending, including lending through online platforms and mobile apps has submitted its recommendations.
Key recommendations:
- A separate legislation should be enacted to oversee such lending.
- Setup a nodal agency to vet the Digital Lending Apps.
- A Self-Regulatory Organisation should be set up for participants in the digital lending ecosystem.
- Develop certain baseline technology standards and compliance with those standards as a pre-condition for offering digital lending solutions.
- Disbursement of loans should be made directly into the bank accounts of borrowers and servicing of loans should be done only through the bank accounts of the digital lenders.
- All data collection must require the prior consent of borrowers and come ‘with verifiable audit trails’ and the data itself ought to be stored locally.
Benefits of digital lending:
- Digital lending has the potential to make access to financial products and services more fair, efficient and inclusive.
- From a peripheral supporting role a few years ago, FinTech-led innovation is now at the core of the design, pricing and delivery of financial products and services.
Need of the hour:
A balanced approach needs to be followed so that the regulatory framework supports innovation while ensuring data security, privacy, confidentiality and consumer protection.
What are the issues wrt digital lending apps?
- They attract borrowers with promise of loans in a quick and hassle-free manner.
- But, Excessive rates of interest and additional hidden charges are demanded from borrowers.
- Such platforms adopt unacceptable and high-handed recovery methods.
- They misuse agreements to access data on the mobile phones of the borrowers.
Sources: the Hindu.
[ad_2]