Payment aggregators to approach RBI regarding new digital lending rules

Under the new rules, the loans can go directly from regulated entities like banks to the customer accounts. This has eliminated the requirement of payment aggregators in these transactions

Payment aggregators in India are likely to approach the Reserve Bank of India (RBI) to dicsuss the new digital lending rules. The new guidelines have eliminated the need for internediaries, according to a report by Economic Times (ET). 

Now, the loans can go directly from regulated entities like banks to customer accounts. This has eliminated the need of payment aggregators in these transactions. ET further stated that Fintech Association for Consumer Empowerment (FACE) is seeking relaxation in the new norms. 

"We are raising this issue with the RBI— why our role has been eliminated," a payment aggregator executive was quoted as saying by ET. No passthrough of any loan is allowed under the new guidelines. 

Fintechs are going back to working out new business models and finding a place for themselves in the lending system. "We are asking the RBI we should be allowed to process these transactions," another executive said. 

Currently, most of the digital lending and buy-now-pay-later loans are disbursed directly to a nodal account and not the customer's bank account. The aggregators send this money directly to the merchant. With new rules by the RBI, this mechanism will cease to exist. 

Some business models have multi-lender arrangements and use pooling and nodal accounts to provide a single repayment instruction to all borrowers, regardless of who the balance sheet lender is. These models will likely need to change, and this will increase operational complexity.” said Suresh Ganapathy, associate director, Macquarie Capital, according to ET.