The Reserve Bank of India (RBI) has published the first set of norms to regulate digital lending. This follows up on the recommendations made by a working group set up to examine this space in January 2021. The central bank also said it would release a second set of norms after engagement with the government and other stakeholders. There may also be a need to set up institutional mechanisms and, perhaps, institute legislative changes. The oversight of this nascent segment is vital. It has seen breakneck growth, anecdotal allegations of a large number of frauds, and the hard-selling of such products to digitally unaware customers who don’t understand the implications and fine print. Action must not only be taken to protect citizens; the central bank is also right to be concerned about the possibility of widespread defaults in a fast-growing, bubbly segment. It must ensure defaults don’t occur on a large scale and that there is no cascading.
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First Published: Thu, August 11 2022. 22:32 IST