(MENAFN- KNN India)
New Delhi, Sep
3 (KNN) India's digital lending landscape has evolved significantly, with loan sanctioning and disbursement now predominantly conducted online.
However, the Reserve bank of India's (RBI) Deputy Governor Swaminathan J highlighted at a media event on Tuesday, September 2, that the recovery process still necessitates a more traditional, "feet on the street" approach.
Swaminathan J expressed concerns about the aggressive recovery tactics employed by some fintech operators, who often extend small-value loans to customers with poor credit profiles.
According to ANI, these tactics sometimes cross ethical boundaries, including invasive practices that breach customer privacy.
Recovery agents have been reported to access borrowers' personal data and contacts, using this information as leverage to ensure repayment.
“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach,” Swaminathan J stated.
He underscored that the current aggressive strategies can tarnish the reputation of regulated lenders affiliated with these fintech platforms and pose risks to individual privacy.
The Deputy Governor also referenced the RBI's regulations on outsourcing, which mandate that regulated entities remain accountable for the actions of their outsourced agents. This framework is intended to ensure that ethical standards are maintained, even as digital processes continue to evolve.
Despite these challenges, the digitisation of loan processes offers significant benefits. It allows banks and non-banking financial companies (NBFCs) to harness data for deeper insights into customer needs and behaviours.
This data can be leveraged to create tailored financial products, improve risk management, and ensure better compliance with regulatory requirements.
The RBI's role, as Swaminathan J outlined, is to provide guidelines that balance innovation with effective risk management. The central bank aims to safeguard the stability and integrity of the financial system while supporting the evolution of digital lending practices.
In summary, while India's digital lending infrastructure has made significant strides, addressing the ethical and privacy concerns in loan recovery remains crucial for maintaining trust and regulatory compliance.
(KNN Bureau)
MENAFN03092024000155011030ID1108632090
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.