In the last few months, we have seen a virtual proliferation of digital lending platforms. Most of them are willing to give away microloans with digital scrutiny, limited paperwork, and almost immediate disbursal. Now RBI has moved in to regulate them.
Lockdown brings focus
One industry that has come into focus in the current lockdown is digital lending. This entails loans via apps with some basic scrutiny and online paperwork. It has also meant that such loans have entailed usurious rates of interest to cover the risk. In addition, digital lending platforms were known to use strong-arm tactics to recover their loans. This has become a lot more prevalent as the recent lockdown resulted in major constraints on economic activity, jobs, and income levels. That has given the background to the new RBI norms.