Fintech and Digital Lending Industries to Establish Self-Regulatory Body
In a significant move, India’s fintech and digital lending sectors are joining forces to create a Self-Regulatory Organization (SRO) within the next six months. This independent body, formed through extensive discussions with the Reserve Bank of India (RBI), will serve as a crucial link between the industry and regulators, ensuring adherence to stringent standards and ethical practices.
The RBI’s proactive approach in formalizing digital lending practices, including introducing the first loss default guarantee (FLDG) system and clear digital guidelines, has set the stage for this development. Industry insiders anticipate the SRO will provide clarity on codes of conduct and business models. Notably, RBI Governor Shaktikanta Das had urged fintech companies to establish such a body during his speech at the Global Fintech Fest 2023.
The creation of the SRO is expected to bring credibility to the sector, fostering increased investments while ensuring customer protection. Companies operating on unsustainable models may need to restructure or exit the market. This move marks a pivotal moment in the evolution of India’s fintech landscape, promising a more secure and regulated environment for businesses and consumers alike. Stay tuned for updates as this transformative initiative progresses.