Fintech association seeks self regulatory status in digital lending from RBI

New Delhi, Jan 21 (KNN) The Fintech Association for Consumer Empowerment (FACE), an industry body with members that include prominent startup firms has applied to the Reserve Bank of India (RBI) to take on the role of a self-regulatory organization (SRO) in the digital lending industry.

According to FACE, its member companies cater to more than half of the consumer lending market volumes in India. 

The organization is already working with regulators, stakeholders, industry players, and other consumer groups on measures to promote consumer empowerment, including financial literacy and consumer protection. 

FACE members came together after digital lending faced a regulatory backlash in the wake of, what it describes as, “fringe elements hurting consumer trust in the system”.

The application comes after the RBI sought suggestions from industry groups to enforce regulations for digital lending platforms to curb illegal apps. 

Without sharing the number of its members, FACE said its member companies serve more than half of the consumer lending market volumes in the country and added that it has already been working with regulators, official stakeholders, and industry players.

A few months ago, there were reports of apps resorting to usurious practices for loan collections, which led to a spate of alleged suicides by borrowers mostly from the southern states.

Typically, a borrower unable to pay money was offered a loan by another app at a higher interest rate to pay off the first, resulting in a debt spiral which the borrower could not emerge out of.

In a statement, FACE said its application comes on the back of RBI seeking suggestions from industry groups to enforce regulations for digital lending platforms in the country in an effort to curb illegal lending apps.

Ram Rastogi, a member of FACE’s governance council, said the body aims to work with RBI to promote “responsible lending which will uphold ethical practices” and weed out predatory lenders.