Mumbai: In a bid to curb quid pro quo in lending, the RBI will introduce new regulations that will prevent loans to entities that wield influence over lending institutions. RBI will also revamp rules for loan aggregators to ensure they act in borrowers’ interest by offering them correct choices.
The proposed changes are part of RBI’s ongoing review of prudential normswhich are typically tightened during periods of high credit growth.In the preceding month, the central bank had increased the risk weight for consumer loans to curb their expansion. RBI has said that these measures are yielding results.
The regulations on connected lending are in response to concerns that arise when there is no arm’s length relationship with borrowers. Issues such as moral hazards, which can compromise pricing and credit management, have prompted the regulator to review its regulations.
Although regulations are in place, they are limited in scope and need uniform applicability across all entities, RBI said. On the measures to curb personal loans, RBI said that it was a pre-emptive step to bring an end to exuberance. Swaminathan Janakiraman, RBI deputy governor, said: “An effort was made to put adequate internal measures to ensure that the build-up was avoided but the market was not responding enough.”
We also published the following articles recently
The proposed changes are part of RBI’s ongoing review of prudential normswhich are typically tightened during periods of high credit growth.In the preceding month, the central bank had increased the risk weight for consumer loans to curb their expansion. RBI has said that these measures are yielding results.
The regulations on connected lending are in response to concerns that arise when there is no arm’s length relationship with borrowers. Issues such as moral hazards, which can compromise pricing and credit management, have prompted the regulator to review its regulations.
Although regulations are in place, they are limited in scope and need uniform applicability across all entities, RBI said. On the measures to curb personal loans, RBI said that it was a pre-emptive step to bring an end to exuberance. Swaminathan Janakiraman, RBI deputy governor, said: “An effort was made to put adequate internal measures to ensure that the build-up was avoided but the market was not responding enough.”
We also published the following articles recently
After tightening personal loans norms, RBI turns attention to connected lending and loan aggregators
RBI will introduce new regulations to prevent loans to entities that wield influence over lending institutions. The proposed changes are part of the RBIs ongoing review of prudential norms. The regulations on connected lending are in response to concerns that arise when there is no arm’s length relationship with borrowers. On the proposed revamp of the regulations for web aggregators, RBI deputy governor Rajeshwar Rao said that this was a follow-up on the recommendations of a working group on digital lending which was accepted by RBI.”On digital lending, we said we will also look at regulating the web aggregators.
RBI will introduce new regulations to prevent loans to entities that wield influence over lending institutions. The proposed changes are part of the RBIs ongoing review of prudential norms. The regulations on connected lending are in response to concerns that arise when there is no arm’s length relationship with borrowers. On the proposed revamp of the regulations for web aggregators, RBI deputy governor Rajeshwar Rao said that this was a follow-up on the recommendations of a working group on digital lending which was accepted by RBI.”On digital lending, we said we will also look at regulating the web aggregators.
RBI bring entities facilitating cross-border payment transactions under its direct regulation
The Reserve Bank of India (RBI) has decided to regulate entities facilitating payment and settlement for online cross-border export/import transactions as Payment Aggregators Cross Border (PA-CB) under the Payment and Settlement Systems Act. Non-bank PA-CBs must have a minimum net worth of Rs 15 crore at the time of applying for authorization, and a minimum net worth of Rs 25 crore by March 31, 2026. Existing non-bank PA-CBs that do not comply with the net worth requirement or fail to apply for authorization by the specified deadline must wind up their PA-CB activity by July 31, 2024. The RBI also specified that the maximum value per unit of goods or services sold by PA-CBs should be Rs 25,00,000.
The Reserve Bank of India (RBI) has decided to regulate entities facilitating payment and settlement for online cross-border export/import transactions as Payment Aggregators Cross Border (PA-CB) under the Payment and Settlement Systems Act. Non-bank PA-CBs must have a minimum net worth of Rs 15 crore at the time of applying for authorization, and a minimum net worth of Rs 25 crore by March 31, 2026. Existing non-bank PA-CBs that do not comply with the net worth requirement or fail to apply for authorization by the specified deadline must wind up their PA-CB activity by July 31, 2024. The RBI also specified that the maximum value per unit of goods or services sold by PA-CBs should be Rs 25,00,000.