RBI - NewNerve

Transparency in Digital Lending: RBI’s New Draft Guidelines for Loan Aggregators

27Apr

By Ankit1 Comment

BFSI, Digital Lending, Goverment Notice/Circulars, Lending, Regtech

Transparency in Digital Lending: RBI’s New Draft Guidelines for Loan Aggregators

The Reserve Bank of India (RBI) has recently unveiled a draft circular that outlines a framework for loan product aggregation by lending service providers (LSPs). The primary objective of this initiative is to enhance transparency for borrowers in the credit intermediation process. Let’s delve into the details of this significant development. Background and Challenges In the digital lending space, LSPs play a crucial role by offering aggregation services for loan products. These LSPs, or even regulated entities (REs) acting as LSPs, establish outsourcing arrangements with multiple lenders. Their digital lending apps/platforms (DLAs) match borrowers to suitable lenders. However, a critical challenge arises: borrowers often lack upfront information about the potential lender. I...

Decoding RBI’s Draft Guidelines on Digital Lending- 26th April 2024

26Apr

By AnkitNo Comments

BFSI, Blog, Digital Lending, Goverment Notice/Circulars, Lending, Review

Decoding RBI’s Draft Guidelines on Digital Lending- 26th April 2024

The Reserve Bank of India (RBI) has issued draft guidelines to ensure transparency in the aggregation of loan products from multiple lenders. This move is aimed at enhancing customer centricity and ensuring complete transparency for borrowers in the credit intermediation process. Key Highlights of the Draft Guidelines: Aggregation Services: Many Lending Service Providers (LSPs) offer aggregation services for loan products. An LSP or a Regulated Entity (RE) acting as an LSP may have outsourcing arrangements with several lenders. The Digital Lending App/Platform (DLA) of the LSP/RE matches the borrower to one of the lenders. In cases where an LSP has arrangements with multiple lenders, the identity of the potential lender may not be known upfront to the borrower. Prior Information t...

India’s Journey from Crisis to Confidence: Decoding the Shaktikanta Das’s Vision

26Apr

By Ankit1 Comment

BFSI, Banking, Blog, Digital Lending, Finance, Fintech, Goverment Notice/Circulars, NBFC, Payments, Review, Technology

India’s Journey from Crisis to Confidence: Decoding the Shaktikanta Das’s Vision

In a recent speech, Reserve Bank of India Governor Shaktikanta Das outlined India's remarkable journey from crisis to confidence. Drawing on historical events and economic data, Das paints a picture of a nation that has overcome numerous challenges to emerge as a global economic powerhouse. Overcoming the 1991 Crisis Das begins by acknowledging the various crises India has faced in recent decades, including the 1991 balance of payments crisis, the 2008 global financial crisis, and the ongoing COVID-19 pandemic. He emphasizes the crucial role played by the RBI in steering the economy through these turbulent times. The 1991 balance of payments crisis was a defining moment for India. With dwindling foreign exchange reserves and a ballooning fiscal deficit, the country faced the threa...

Alarming! 17K ICICI Bank Credit Cards Exposed: Urgent Measures Taken

26Apr

By AnkitNo Comments

Banking, BFSI, Cyber Crime

Alarming! 17K ICICI Bank Credit Cards Exposed: Urgent Measures Taken

In a shocking revelation, ICICI Bank admitted to a major data breach, exposing the credit card data of around 17,000 new customers. The bank quickly took action by blocking the affected cards and assuring compensation to the affected customers. The issue came to light when some customers noticed the full credit card number, expiry date, and CVV of unknown customers on their iMobile Pay app. The bank clarified that the data exposure was due to an error in mapping new credit cards to the wrong users in their digital channels. ICICI Bank Blocks 17,000 Credit Cards After Data Breach: What Should Customers Do? - News18 This incident raises serious concerns about the security of digital banking platforms and the need for robust data protection measures. ICICI Bank, one of India's leading...

Co-lending Model: A Collaborative Approach to Financial Inclusion in India, 2024

25Apr

By Ankit1 Comment

Blog, Banking, Digital Lending, Lending, Microfinance, NBFC

Co-lending Model: A Collaborative Approach to Financial Inclusion in India, 2024

The co-lending model has emerged as a significant innovation in the Indian financial landscape, aiming to bridge the credit gap and promote financial inclusion. This model involves collaboration between banks and non-banking financial companies (NBFCs), leveraging their respective strengths to offer wider access to credit for underserved segments. Stakeholders and their involvement: Banks: Contribute their robust risk management expertise, regulatory compliance, and access to low-cost funds. They typically originate the loan and conduct due diligence on borrowers. NBFCs: Bring their domain expertise in specific sectors, strong customer relationships, and agility in loan processing. They often handle customer acquisition, credit assessment, and loan servicing. Borrowers: Benefit...

Kotak Bank’s Digital-Only Zero-Balance Savings Accounts Hit a Roadblock: RBI’s Action

25Apr

By Ankit1 Comment

Banking, BFSI, Goverment Notice/Circulars

Kotak Bank’s Digital-Only Zero-Balance Savings Accounts Hit a Roadblock: RBI’s Action

In a significant development within India’s banking sector, digital savings accounts have been reshaping traditional norms, offering unparalleled convenience and efficiency. Leading this transformation was Kotak811, which exemplified how digital banking is revolutionizing financial management in India. With features like instant activation, zero balance requirements, free virtual debit cards, and credit cards against fixed deposits (without employment or income proofs), Kotak811 met the demands of today’s tech-savvy generation. One standout feature was ActivMoney, allowing account holders to earn up to 7% interest p.a. on savings by automatically investing idle funds into fixed deposits, without penalties for withdrawal. Moreover, digital savings accounts have democratized access to...

Evergreening in the Lending Ecosystem in India: Understanding the Practice and its Implications

24Apr

By Ankit1 Comment

Lending, BFSI, Digital Lending, Microfinance, NBFC, Regtech

Evergreening in the Lending Ecosystem in India: Understanding the Practice and its Implications

In the lending ecosystem of India, there are various practices and strategies employed by financial institutions to manage their loan portfolios. One such practice that has garnered attention is "evergreening." Evergreening refers to a process wherein lenders extend new credit or provide additional funds to borrowers who are struggling to repay existing loans, primarily to maintain the appearance of a performing loan. In this article, we will explore the concept of evergreening in the Indian lending ecosystem, its implications, and the regulatory measures in place to address this practice. Understanding Evergreening It involves granting additional credit or restructuring existing loans to borrowers who are facing financial distress, often without addressing the underlying issues causin...

Building Trust and Confidence: The Regulatory Ecosystem of Lending in India

24Apr

By Ankit1 Comment

Lending, BFSI, Blog, Digital Lending, Goverment Notice/Circulars, NBFC, Regtech

Building Trust and Confidence: The Regulatory Ecosystem of Lending in India

Lending plays a crucial role in India's financial landscape, providing individuals and businesses with access to capital for various purposes. To ensure the stability, transparency, and fairness of lending practices, the lending space in India operates within a robust regulatory ecosystem governed by multiple authorities and regulations. In this article, we will delve into the key components of the regulatory framework for lending in India, shedding light on the various entities and regulations that shape the lending landscape. Reserve Bank of India (RBI): At the heart of India's lending regulatory framework stands the Reserve Bank of India (RBI). As the central banking institution, the RBI plays a pivotal role in regulating the lending sector. It formulates and implements policies a...

RBI Imposes Penalty on Fatehabad Central Cooperative Bank for Non-Compliance with Unclaimed Funds Transfer Rules

23Apr

By Ankit1 Comment

BFSI, Banking, Goverment Notice/Circulars

RBI Imposes Penalty on Fatehabad Central Cooperative Bank for Non-Compliance with Unclaimed Funds Transfer Rules

The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹2 lakh on The Fatehabad Central Cooperative Bank Limited, Fatehabad, for contravention of the provisions of section 26A (2) read with section 56 of the Banking Regulation Act, 1949 (BR Act). The penalty was imposed based on the findings of a statutory inspection conducted by National Bank for Agriculture and Rural Development (NABARD) with reference to the bank’s financial position as on March 31, 2022. The inspection revealed that the bank had not transferred the eligible unclaimed amounts to the Depositor Education and Awareness Fund within the prescribed time limit. This action is in violation of the provisions of section 26A (2) read with section 56 of the Banking Regulation Act, 1949 (BR Act). Also Read: RBI Imp...

RBI Imposes Monetary Penalty on Panvel Co-operative Urban Bank

23Apr

By Ankit1 Comment

BFSI, Goverment Notice/Circulars

RBI Imposes Monetary Penalty on Panvel Co-operative Urban Bank

In a move to ensure compliance with regulatory directives, the Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1.00 lakh on The Panvel Co-operative Urban Bank Ltd., Raigad, Maharashtra. According to the press release, the penalty was levied based on the findings of a statutory inspection conducted by the RBI, which revealed the bank's non-compliance with directions issued under the 'Supervisory Action Framework' (SAF) for Primary (Urban) Co-operative Banks (UCBs). Specifically, the RBI found that the bank had sanctioned fresh loans carrying a risk weight of more than 100%, in violation of the specific directions issued under the SAF. After considering the bank's response to the show-cause notice, the RBI determined that the charge of non-compliance was sustained, warra...