RBI cracks down on bank agents, customers will have to give complete information about loan offers

RBI: RBI has sought views from stakeholders on the draft till May 31. It added that lending to persons who are in a position to control or influence the lender's decisions may be a matter of concern if the lender does not maintain a distance from such borrowers.

Apr 27, 2024 - 14:35
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RBI cracks down on bank agents, customers will have to give complete information about loan offers

RBI has tightened further restrictions on banks. Loan service providers (LSPs), acting as agents of banks, should provide information about all available loan offers to borrowers so that they can make informed decisions.

Many LSPs provide aggregation services for loan products. RBI has sought views from stakeholders on the draft till May 31. It added that lending to persons who are in a position to control or influence the lender's decisions may be a matter of concern if the lender does not maintain a distance from such borrowers. It states that such lending may involve moral hazards. This is likely to lead to compromise in pricing and debt management.

The draft suggests making all loan offers that meet the borrower's needs available digitally, regardless of the banks or financial institutions the LSP works with. This should contain the loan amount, tenure, annual interest rate, and other terms and conditions in addition to the name of the institution making the loan offer.

Muskan Kumawat Journalist & Writer