FM asks financial sector regulators to take more steps to curb unauthorised lending via apps
- The Finance Minister asked financial sector regulators, including the Reserve Bank of India (RBI), to take further measures to check spread of unauthorised lending through online apps.
Key Highlights
- Finance Minister Addressed the 28th meeting of the Financial Stability and Development Council (FSDC)
- The ongoing inter-regulatory issues were also discussed to support GIFT IFSC in its strategic role to become one of the world’s premier international financial centres
- The objective is to remain proactive, maintain cyber security preparedness with constant vigilance, and take appropriate and timely action to mitigate any such vulnerabilities in the Indian financial system.
- Fraudulent loan apps have defrauded many gullible borrowers of their money, leading to distress in many cases.
First Loan Default Guarantee (FLDG)
- FLDG is a lending model and a credit-sharing agreement between digital lending apps and their partner banks and NBFCs.
- As per these agreements, the digital lending apps will give credit guarantees to compensate their partners up to a certain amount in case of default.
- Regulated entities such as banks and NBFCs lend from their own book through these fintech or digital lending apps.
Prelims Takeaway
- First Loan Default Guarantee
- GIFT IFSC