InvestorQ : Why has digital lending come into focus and should the RBI really regulate digital lending?
prachi Patwardhan made post

Why has digital lending come into focus and should the RBI really regulate digital lending?

Answer
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3 months ago


In the last few months, digital lending has come into focus due to the financial stress created by the lockdown post COVID-19. Defaults have increased and that is more pronounced in the case of digital loans that are normally disbursed with minimal documentation and scrutiny. That has brought digital lending back into focus

It needs to be, however, remembered that digital lending is not just an India-specific phenomenon. Globally, it has picked up in a big way, especially in EMs. Too much regulation can be counterproductive but the RBI is surely justified in the sense that better regulation will ensure more orderly growth of the digital lending business.

But there are some risks that the RBI sees in digital lenders. As of now, the rates are too unregulated arbitrary and digital lenders have become digital versions of erstwhile money lenders. That is something that could hamper the orderly growth of digital lending in India. Regulation and timely RBI intervention will only help digital lending in the long run.