RBI cautions against unbridled mushrooming of digital lending platforms

The number of UPI QR code-enabled payment acceptance points increased by about 9 crore to reach 20 crore as at end of July 2022

Reserve Bank of India Governor Shaktikanta Das on Tuesday cautioned against the unbridled mushrooming of digital lending platforms which have been charging excessive interest rates and indulging in unethical recovery and breaching data privacy.

This comes at a time when the RBI is engaged in preparing a list of legal digital loan apps which alone would be allowed to lend in the future.

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“The need of the hour is to ensure assurance of safety after following a process of green-lighting (whitelisting) and due diligence by the regulated entities. The RBI, in association with other relevant agencies, is taking steps to address this issue and take further steps as may be necessary.

“As we continue to support technological advancement and innovation, it is equally important that adequate attention is also placed on governance and conduct issues,” he said at a Fintech event.

The Governor said the RBI was “actively” working towards a phased implementation of Central Bank Digital Currency (CBDC) in both wholesale and retail segments. This is expected to give further fillip to the digital ecosystem.

He said India took a lead role among developing countries to use digital payments to deliver Covid-19 relief.

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According to World Bank, 58 developing countries made digital payments to deliver Covid relief.

“In India, the pandemic accelerated the push towards digitalisation, especially in the rural areas. The period from March 2020 to August 2022 has seen a massive growth of 427 per cent in UPI transactions, which reached a new high of 657 crore transactions in August 2022 alone,” Das said.

The number of UPI QR code-enabled payment acceptance points increased by about 9 crore (86 per cent YoY) to reach 20 crore as at end of July 2022, reflecting the growing acceptance and preference for contactless payments.