Digital lenders’ body seeks RBI nod to be recognised as an SRO
In the backdrop of illegal lending apps leading to instances like borrower suicides, a body representing digital lenders has come forward and applied to the RBI for being recognized as a self regulatory organisation (SRO) for the industry. Claiming to be the only body of digital lenders, FACE, which is an acronym for Fintech Association for Consumer Empowerment, said it aims to work with the regulator in dealing with “fringe elements” hurting the consumers’ trust in the industry.
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. Many of the instances were reported from the southern states.
Typically, a borrower unable to pay money was offered a loan by another app at a higher interest rates 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. Members of FACE serve 90 lakh consumers in 19,000 PIN codes of the country, the statement said.