According to three people familiar with the matter, the Reserve Bank of India (RBI) is in extensive consultations with digital lending and consumer associations as it moves closer to finalizing guidelines for digital lending. The regulator has held meetings with the Digital Lenders Association of India (DLAI) and the Fintech Association for Consumer Empowerment (FACE), with more discussions to follow in the coming weeks.

“The RBI has reached out to these associations on their findings and views on various aspects such as First Loan Default Guarantee (FLDG) and KYC norms for digital lenders. They have sought some responses from the associations, and the dialogue is ongoing,” said one of the sources, who asked not to be named.

DLAI represents more than 80 members, including digital lenders and now pays later (BNPL) players such as ZestMoney, Capital Float, Lendingkart, NeoGrowth Credit, Cred, and Uni. FACE is an organization focused on expressing consumer concerns, and its members include lenders such as Kissht, CredAvenue, KreditBee, and Paisa Bazaar.

After the association submits its response, the RBI may share its final views on key specifications with the industry before publishing the guidance. In his final press conference after the Monetary Policy Committee (MPC) meeting on April 8, RBI Governor Shaktikanta Das said the regulator was close to finalizing the norms, with final guidelines expected in the next month or two.

“We have received a lot of comments on the recommendations of the Digital Lending Task Force. I believe the review of those comments is complete,” he said. Deputy Governor M Rajeshwar Rao said the Digital Lending Task Force report received more than 650 comments, and a response was made based on those comments, which will be used for further discussions.

The Digital Lending Task Force, led by RBI executive director Jayant Kumar Dash, submitted its report in November 2021 recommending norms to curb illegal lending via apps and other digital modalities. The commission was established in January 2021 after multiple customers were forced to commit suicide after suspicious apps borrowed money at high rates from unsuspecting customers and used high-pressure recovery methods.

The working group made recommendations in legal and regulatory, technological, and financial consumer protection. These recommendations are designed to ensure that customers borrow only from verified and authentic media, and fintech that falls within the scope of these norms includes credit and buy now pay later (BNPL) players.