Personal Loans: How RBI’s New Rules on Digital Lending Affect You

The Reserve Bank of India (RBI) issued new guidelines on May 8 to regulate digital lending, especially when it involves multiple lenders. These changes aim to bring more transparency and fairness to how personal loan offers are presented to borrowers through digital platforms.

What’s the Issue?

Loan service providers (LSPs) often partner with many banks and NBFCs to offer digital loans. These platforms show borrowers a range of loan options. But until now, there were no clear rules on how these offers were shown. The RBI invited suggestions on this in April and has now finalised the rules to ensure borrowers are treated fairly.

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Key RBI Rules for Loans from Multiple Lenders

1. Clear Display of All Offers

When a lending platform partners with multiple banks or NBFCs (called regulated entities or REs), it must show all matching loan offers clearly. If some lenders don’t match the borrower’s request, their names should still be listed.

2. Fair and Consistent Matching System

The platform can use any method to match borrowers with lenders, but it must apply the same method for similar borrowers and loan products. The method used, along with any updates, must be well-documented.

3. Detailed Loan Information Must Be Shown

For each matching loan offer, the following must be shown:

• Name of the bank or NBFC
• Loan amount and tenure
• Annual Percentage Rate (APR)
• Monthly repayment amount
• Any applicable penalty charges

Each loan offer must also include a link to the Key Facts Statement (KFS), so the borrower can compare offers fairly.

4. No Bias or Promotion

Lending platforms must not favour or promote any specific bank or loan offer, either directly or indirectly. This includes avoiding misleading designs or tricks (known as "dark patterns") that push borrowers toward a certain lender.

However, ranking loan offers based on publicly available data (like interest rates or customer ratings) is allowed, as long as it’s clear and fair.

Why This Matters for Borrowers

These new RBI rules are meant to protect borrowers by ensuring:

• Full transparency of loan terms
• Fair comparison between lenders
• Protection from biased or misleading loan promotions

As a borrower, you’ll now get a clearer picture of your loan options—helping you make more informed financial decisions when choosing a personal loan.

Conclusion

RBI’s latest move is a step toward borrower empowerment in the fast-growing digital lending space. By enforcing transparency and fair practices, these rules make it easier for borrowers to compare personal loan options and avoid biased or misleading offers. If you're exploring a digital personal loan, you can now do so with greater confidence and clarity.

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