Inside This Article
The Reserve Bank of India (RBI) has made an important update. It is now not just checking NBFCs (non-banking finance companies), but also the loan apps and fintech partners they work with. These partners are called Loan Service Providers (LSPs).
This move shows one thing clearly: NBFCs must take full responsibility for the actions of their partners. Everyone involved in giving loans must follow the rules.
This step is meant to improve customer safety and stop unfair practices in the digital lending market. It also shows that the RBI is serious about keeping digital lending clean, safe, and well-regulated.
In this blog, we explore:
- What does this move mean for NBFCs
- The key changes introduced by the RBI
- How NBFCs and their partners can stay compliant
- Steps companies can take to be future-ready in a changing digital lending environment
🔍 Key Things You Need to Know
1. RBI Will Now Talk to Loan Apps Too
RBI will speak directly with LSPs—especially the ones that deal with customers. It wants to check if they follow rules for KYC, data safety, and clear loan terms.
These platforms often act as the “face” of the loan. So, if they do something wrong, the customer suffers—even if the NBFC is following the rules. That’s why the RBI wants to check both sides.
2. Customer Consent Is a Must
LSPs must now follow KYC rules and get permission before collecting or using customer data. NBFCs should make sure their tech partners are doing this correctly.
Apps should not collect unnecessary data or use it without telling the customer. Customers have the right to know what data is being used and why.
3. Don’t Depend Too Much on One App
If an NBFC works with only one or two loan apps, it could be risky. If that app shuts down or breaks rules, it can affect your whole business. RBI wants NBFCs to reduce this risk.
Diversifying your digital partners means your business won’t stop if one partner has a problem. It’s better for long-term safety and growth.
4. Data Safety Is Now a Big Focus
With so much digital lending, customer data must be kept safe. RBI wants NBFCs and their partners to have strong cybersecurity systems.
This includes protecting apps from hacking, using secure servers, and avoiding data leaks. A small mistake can lead to big trouble, so it’s best to stay prepared.
5. NBFCs Are Still Fully Responsible
Even if a loan app does something wrong, the NBFC will be held responsible. That means you must check your partners carefully and monitor them regularly.
NBFCs cannot say, “It was the app’s fault.” RBI will still hold the NBFC accountable. So it’s important to do regular checks and keep a close watch on all third-party actions.
Why RBI Is Doing This Now
In 2022, RBI made new rules for digital lending. These were to stop unfair practices like hidden charges, bad customer service, and misuse of personal data.
But problems are still happening—especially from some unregulated loan apps. So now, RBI is stepping in to check the whole process, including the tech partners.
There have also been complaints from borrowers who were charged extra fees, treated badly by recovery agents, or had their data misused. RBI wants to fix these issues before they grow bigger.
What We Think at NBFC Advisory
We think this is a positive and smart step. It will help build trust in digital lending and protect customers. It also gives NBFCs a chance to improve their systems.
Here’s what we suggest:
✅ Review all your tech and LSP partnerships
✅ Make sure partners follow RBI rules
✅ Add data security checks
✅ Update your contracts with clear roles and duties
✅ Train your team on digital compliance and customer safety
If your partners grow, you grow too. But if they break rules, you’ll face the penalties. That’s why staying informed and proactive is key.
✅ Final Word: Work Together, Stay Compliant
Digital lending is growing fast. That means rules are getting stricter too. NBFCs must lead the way by making sure both they and their partners are doing the right thing.
Everyone in the loan process is now under the spotlight. Shared responsibility is the future.
Being compliant is not just about following rules—it also builds trust with customers, improves your brand, and avoids legal troubles.
📞 Call NBFC Advisory: +91 93287 18979
🌐 Visit: nbfcadvisory.com
For more details, read the full article on The Economic Times:
RBI expands NBFC audit ambit to cover their service providers
We’re here to help you stay compliant and confident, so your business grows the right way.
Read Article: https://nbfcadvisory.com/understanding-cibil-experian-crif-high-mark-and-equifax-in-india/
