RBI sets up a Working Group to study cyber issues around digital lending
Published 15 January 2021
Indian banking regulator RBI has set up a Working Group (WG) to study all aspects of digital lending activities such as data security, privacy, confidentiality and consumer protection.
Recent spurt and popularity of online lending platforms/ mobile lending apps, especially concerning digital lending has raised certain serious concerns which have wider systemic implications. Against this backdrop, a Working Group (WG) is being set up to study all aspects of digital lending activities in the regulated financial sector as well as by unregulated players so that an appropriate regulatory approach can be put in place, RBI said in a notification.
Digital lending has the potential to make access to financial products and services more fair, efficient and inclusive. From a peripheral supporting role a few years ago, FinTech led innovation is now at the core of the design, pricing and delivery of financial products and services. While penetration of digital methods in the financial sector is a welcome development, the benefits and certain downside risks are often interwoven in such endeavours. A balanced approach needs to be followed so that the regulatory framework supports innovation while ensuring data security, privacy, confidentiality and consumer protection.
The Working Group (WG) will consist of both internal and external members. Internal members include Jayant Kumar Dash, Executive Director, RBI (Chairman), Ajay Kumar Choudhary, Chief General Manager-in-Charge, Department of Supervision, RBI; P. Vasudevan, Chief General Manager, Department of Payment and Settlement Systems, RBI and Manoranjan Mishra, Chief General Manager, Department of Regulation, RBI (Member Secretary). External memberswill consist of Rahul Sasi, Cyber Security Expert & Founder of CloudSEK and Vikram Mehta, former associate of Monexo Fintech.
The Working Group (WG) will have the task to:
- Evaluate digital lending activities and assess the penetration and standards of outsourced digital lending activities in RBI regulated entities;
- Identify risks posed by unregulated digital lending to financial stability, regulated entities and consumers;
- Suggest regulatory changes,to promote orderly growth of digital lending;
- Recommend measures, for expansion of specific regulatory or statutory perimeter and suggest the role of various regulatory and government agencies;
- Recommend a robust Fair Practices Code for digital lending players, in-sourced or outsourced;
- Suggest measures for enhanced Consumer Protection; and
- Recommend measures for robust data governance, data privacy and data security standards for deployment of digital lending services.
RBI has given the Group three months to submit its report . You can glean more insights on cyber security during W.Media’s Digital Week 2021, from February 23-26. https://w.media/digital-events/