Reserve Bank of India releases regulatory framework for digital lending

The framework aims to mitigate regulatory concerns and is based on the principle that the business of lending can only be carried out by entities either regulated by the RBI, or permitted to do so by law.

As such, as per Annex I, the framework largely applies to regulated entities and lending service providers engaged by the same. As per Annexes II and III, other authorised entities may be regulated through rules based on the working group's recommendations, while the regulation of entities falling outside of the scope of the law would require further consideration by the Government of India.

For regulated entities, the framework includes requirements which are expected to be implemented immediately. In terms of technology and data requirements, the framework provides the following, among other things:

• data collected by digital lending apps should be based on need, and with the prior and explicit consent of the borrower who will have certain rights to deny or revoke consent, restrict disclosure, and request deletion;

• regulated entities with digital lending apps must establish a comprehensive privacy policy which must disclose, among other things, third-party access to data collected;

• no biometric data should be collected or stored in systems associated with digital lending apps, unless otherwise permitted; and

• regulated entities should ensure that all data is stored in servers located in India, while ensuring compliance with statutory obligations and regulatory instructions.

Regulation in India

With this agreement, RBI and BI committed to deepen relations between both central banks and strengthen the exchange of information and cooperation in central banking. The MoU will be implemented through policy dialogue, technical cooperation, exchange of information, and joint work.

India appears to be cracking down on companies that violate regulations. One of the latest examples is Binance’s Indian branch WazirX, who has had its assets frozen by the country’s economic criminal investigation unit, under the Prevention of Money Laundering Act.