RBI strict on loan-giving companies, customers will have to give information about all types of loan options

RBI has shown a strict stance on loan service providers (LSPs) and has asked customers to tell them all the options. This will make it easier for potential loan-taker customers to decide. Many LSPs also act as aggregators of loan products. In such a situation, they have information about many types of loan products.

Apr 26, 2024 - 21:52
RBI strict on loan-giving companies, customers will have to give information about all types of loan options

To increase openness, the RBI on Friday suggested new guidelines for loan service providers (LSPs) working as bank agents. It states that LSPs must inform clients of all loan options that are open to them.

Potential loan applicants will find it simpler to decide as a result. In addition, a lot of LSPs aggregate loan products. In this scenario, they are knowledgeable about a wide range of loan options.

According to current outsourcing guidelines, an LSP is an agent of a regulated banking entity (RE) in charge of customer onboarding, pricing, monitoring, and recovery of a particular loan or loan portfolio.

"In such cases, especially where the LSP is linked to multiple lending entities, the identity of the potential borrower may not be known to the lender in advance," the RBI said in a draft proposal on transparency in digital lending products. Needed.'

According to the proposal, LSPs should provide digital details of offers available to all interested lenders, keeping in mind the needs of the borrower. This detail should include the name of the entity offering the loan, the loan amount and tenure, as well as the annual percentage rate and other conditions. RBI has sought comments on this proposal till May 31.

RBI said on Friday that there has been no change in the limit of foreign portfolio investment in government securities, state development loans, and corporate bonds for the financial year 2024-25. Currently, these investment limits are six, two, and 15 percent respectively.

The RBI on Friday invited applications from eligible small finance banks (SFBs) to become regular banks. At present many SFBs including AU Small Finance Bank, Equitas Small Finance Bank, and Ujjivan Small Finance Bank are operating in the country.

The minimum net worth of SFB to apply should be Rs 1000 crore. The SFB should be profitable for the last two financial years and the gross NPA and net NPA of the SFB in the last two years should be three and one percent or less respectively.

Muskan Kumawat Journalist & Writer