On 8th May, the RBI rolled out the Digital Lending Directions, 2025. Some rules are new, some are upgrades, and a few feel like the RBI saying, ‘I really mean it this time’. Together, they tighten the nuts and bolts of the digital lending ecosystem.
There’s a lot in here for Loan Service Providers (LSPs) and Regulated Entities (REs). Here is a quick breakdown:
A. What’s New
🧮 🧮 Loan Aggregator Rules (for DLAs tied to multiple REs)
From 1 November 2025, DLAs that work with more than one RE must follow these rules:
a. a. Display all loan offers that match a borrower’s request, and share the following key details to help borrowers compare the loan offers:
- Name of REs
- Loan amount and tenure
- Interest rate and EMI
- Penal charges (if any)
- Key Fact Statement
b. b. Also display products listed on the DLA that don’t match the borrower’s request.
c. c. Keep the matchmaking mechanism consistent across similar borrowers and loan products.
Document how you do it.
d. No playing favourites. Don’t promote one RE’s product over another without a clear, pre-
disclosed ranking logic.
📢 The DLA Repository
REs must report all DLAs listing their products to the RBI’s new DLA Portal. Think of it as a public directory — whatever REs submit will be displayed as-is on the RBI site.
Deadline for reporting: 15 June 2025
Mandatory information for reporting includes:
a. DLA name
b. Ownership details (LSP/self-owned)
c. Grievance officer of the DLA
d. RE’s website
Other requirements:
a. a. Keep the list updated – add new DLAs, remove discontinued ones.
b. b. The RE’s Chief Compliance Officer or any other officer managing RE's compliance function must certify that:
- The submitted info is accurate
- RE’s DLAs comply with RBI norms
- RE’s DLAs host link to the RE websites
- RE’s DLAs have a grievance officer and follow RBI rules
- RE’s website displays details of DLAs submitted to the RBI.
B. What’s Changed in the Old Rules
🌐 Offshore data processing recognized with conditions
Earlier, the RBI wanted all lending data stored locally – it was silent on offshore processing of such data. Now, it explicitly allows offshore processing, but the data must be deleted from foreign servers and brought back to India within 24 hours of processing.
📋 Stronger monitoring obligations for REs
The tone of the rules for REs on LSP monitoring has become sterner. For instance, they must:
a. have a formal policy to monitor LSP-originated loan portfolios
b. not only review LSP’s conduct periodically but also mandatorily take actions in case of default/non-compliance.
🕐 More room to design exit windows
REs have the flexibility to set their own cooling-off period, provided it’s longer than one day.
📅 DLG disclosures: tighter deadline
Details of default loss guarantee arrangements finalized in a particular month must now be published on the LSP’s website within 7 working days of the next month. Previously, there was no deadline prescribed under the guidelines.
Hit us up if you’d like to discuss any of the changes.
Author Credits: Fintech Team - Aparajita, Astha, Shayeri, Samyukta.
