THE RBI'S DIGITAL LENDING GUIDELINES: ASSESSING THE IMPACT ON CREDIT ACCESS FOR INDIAS UNDERBANKED POPULATION

Digital lending has changed the way many Indians access credit. Mobile applications, online lending platforms and digital verification have made it possible for borrowers to apply for loans without visiting a traditional bank branch. This development has been particularly important for people who may have limited access to formal banking services. However, the rapid growth of digital lending also created concerns about high charges, misuse of personal data, misleading loan offers and aggressive recovery practices. In response, the Reserve Bank of India (RBI) introduced its Guidelines on Digital Lending in September 2022. This paper examines the purpose of these guidelines and considers their potential effect on credit access for underserved borrowers. It focuses on changes in consumer protection, data usage, disclosure and the relationship between regulated entities and digital lending service providers. The evidence suggests that the RBI's approach has strengthened transparency and accountability in digital lending, although stricter compliance requirements may increase costs for some lenders. The broader challenge is therefore to ensure that regulation removes harmful lending practices without making legitimate digital credit unnecessarily difficult to access.