The Reserve Bank of India (RBI) continues to strengthen the digital lending ecosystem. In its May 2025 update to the Digital Lending Guidelines, the RBI reinforced its commitment to ensuring data privacy, borrower protection, and transparency in digital lending.
Since 2022, RBI’s digital lending framework has focused on giving borrowers complete control over their data and lending choices, while holding Regulated Entities (REs) and their Lending Service Providers (LSPs) accountable for fair practices. The recent updates build upon this, tightening compliance expectations for all parties involved.
Key Highlights from the 2025 Update
- Direct Loan Disbursals
All disbursals and repayments must flow directly between the borrower’s bank account and the RE’s account—no third-party or pooling accounts allowed. - Standardized Key Fact Statement (KFS)
Borrowers must receive a clear, all-inclusive cost disclosure in the form of an Annual Percentage Rate (APR) before accepting any loan. Additionally, LSPs are required to display the KFS prominently to borrowers before the loan is executed, ensuring full transparency and informed decision-making. - Cooling-Off Period
A mandatory "cooling-off period" must be provided, allowing borrowers to exit the loan without penalty by repaying the principal and proportionate APR. - Data Protection & Consent
Only need-based data can be collected from borrowers—with explicit, prior consent and a clear audit trail. - Lender Neutrality
In cases where LSPs work with multiple lenders, they must display all lending partners equally and offer borrowers the choice to select a lender. No preferential display or routing is allowed unless the borrower explicitly selects a lender. - Grievance Redressal
REs and LSPs must have dedicated grievance redressal officers, and contact details must be clearly visible on websites and DLAs.
What It Means for LSPs
LSPs are now under greater scrutiny. The RBI expects them to:
- Clearly list all RE partners they work with—no dark patterns or preferential listings.
- Route loans transparently, reflecting borrower preferences and ensuring fairness.
- Avoid any mis-selling or bundling of loans with other products or services.
- Ensure tech compliance: This includes secure APIs, consent tracking, and updated data privacy mechanisms.
How We Can Help
Having implemented the entire Digital Lending Architecture (DLA) for REs and LSPs, we deeply understand the intersection of regulation, technology, and customer experience.
We can help you:
- Conduct a full gap assessment of your current lending journeys
- Define a compliance roadmap tailored to your RE or LSP role
- Build and implement tech frameworks that align with RBI’s expectations—secure consent management, multi-lender interfaces, KFS generation, audit trails, etc.
- Guide LSP partners in aligning with multiple REs while remaining lender-neutral and regulation-compliant
Let’s work together to future-proof your digital lending business—regulatory-first, customer-first, and technology-driven.
For any queries or to explore how we can support your digital lending journey, reach out to us at info@bajajtechnologyservices.com