Reserve Bank of India (RBI) Governor Shaktikanta Das refuted claims that new digital lending guidelines would hinder fintech growth, asserting instead that investor confidence in the sector has risen since their implementation.
Speaking at the Mint BFSI conclave in Mumbai, Das highlighted the positive impact of these regulations, including the first loss default guarantee (FLDG) guidelines, on investor sentiment.
The digital lending sector, which saw rapid growth post-pandemic, has been under regulatory scrutiny. Das emphasized that the new rules, aimed at balancing growth with oversight, have boosted investor confidence and prevented crises.
The guidelines, released in 2022, mandate direct loan servicing and repayments to regulated entities’ accounts, barring third-party pass-throughs. Disbursements must go to the borrower’s account, and any fees to lending service providers are to be paid by the entity, not the borrower.
In 2023, the RBI further limited FLDG to 5% of a loan portfolio’s outstanding amount. Das also spoke about the Indian banking sector’s progress in overcoming challenges, including high non-performing assets (NPAs) and the impact of the ILFS crisis and COVID-19 pandemic.
He praised the RBI and banks’ efforts over the past five years, which have led to improvements in capital adequacy, asset quality, and profitability.
Despite recent challenges, Das believes the banking sector has emerged stronger. He underscored the importance of timely regulatory changes and the RBI’s role in ensuring financial stability and growth. The RBI has worked on a robust regulatory architecture since 2019, including consolidating departments for better oversight.
Das concluded by highlighting the banking sector’s turnaround as a key part of India’s success story, while cautioning against complacency and reaffirming RBI’s commitment to a resilient banking sector.