Jama Wealth Blog

Digital lending is leading to more loans and more stress in the borrowers. Some unscrupulous players are exploiting this trend as well.  The Reserve Bank of India (RBI) is now taking a step towards a safer digital lending landscape with the establishment of the Digital India Trust Agency (DIGITA). This initiative aims to combat the dangers associated with illegal lending apps and bring more transparency and accountability to the digital lending sector.

The Problem: Illegal Lending Apps

The rise of digital lending has undoubtedly made borrowing more accessible. However, it has also opened doors for unscrupulous lenders who exploit borrowers through exorbitant interest rates, hidden charges, and aggressive collection practices. These illegal lending apps often target vulnerable individuals in need of quick financial assistance.

RBI’s Solution: The Digital India Trust Agency (DIGITA)

To address these concerns, the RBI is proposing DIGITA. This agency will function as a regulatory body for digital lending apps. Its primary responsibilities will include:

• Verification of lending apps: DIGITA will verify the legitimacy and compliance of lending apps. Only authorized apps will be included in a public registry maintained by the agency.
• Public register of authorized apps: This register will serve as a trusted source for borrowers to identify legitimate lenders. Apps not on the list will be considered unauthorized and potentially dangerous.

Expected Benefits of DIGITA

The establishment of DIGITA is expected to bring several benefits to the digital lending sector:

• Increased transparency: DIGITA will promote transparency in the digital lending market. Borrowers will have access to a clear and comprehensive list of authorized lenders.
• Enhanced accountability: Authorized lenders will be held accountable for their practices, ensuring adherence to fair lending guidelines.
• Reduced borrower exploitation: The presence of a regulatory body will deter illegal lending practices and protect borrowers from predatory lenders.

A Look Ahead

The creation of DIGITA is a positive step towards a safer and more trustworthy digital lending ecosystem in India. While the initiative is still in its development phase, it holds immense promise for both borrowers and legitimate lenders. As DIGITA takes shape, it will be interesting to see how it evolves and shapes the future of digital lending in India.