A self-regulatory organisation (SRO) for the fintech and digital lending sectors will be established within the next three to six months, according to media reports.
The Digital Lenders Association of India (DLAI) and the Fintech Association for Consumer Empowerment (FACE) are in talks with the Reserve Bank of India (RBI) to create a self-regulatory organisation (SRO) for the industry. Once established, the SRO will provide guidelines and standards for the industry. The RBI plans to introduce a framework for SROs for regulated entities in the future.
In June 2023, the RBI approved a system called the first loss default guarantee (FLDG) with a limit of 5 per cent. In September 2022, the central bank introduced digital guidelines to provide more clarity in this area.
The SRO will bring clarity to the business model, security, growth and overall business of the sector. It will also require companies with a risky model to make changes or close down.
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