The RBI had barred the first loss default guarantee arrangement under the digital lending norms. Under this credit-risk sharing agreement, a certain percentage of the default loan portfolio of banks and NBFCs (registered entities) are guaranteed by a third party, a fintech or lending service provider (LSP).
The registered entities will ensure that a default cover could be provided for up to 5 per cent of the loan portfolio. In case of implicit guarantee arrangements, the DLG provider will not bear performance risk of more than the equivalent amount of 5 per cent of the underlying loan portfolio, the framework said. According to the guidelines, the registered entities will invoke default loss guarantee within a maximum overdue period of 120 days, unless made good by the borrower before that.
Followed by the RBI decision, fintech companies were forced to look at alternate options like co-lending small ticket loans, co-branded partnerships and revenue-sharing models.
“Streamlining Bharat Bill Payment System will help integrate backend systems efficiently for a seamless experience, which could also bring new players to the table and improve the ad-hoc payment system. It will be an advantage to bolster fraud monitoring and risk mitigation systems to ensure smooth online transactions,” said Pranay Jhaveri, managing director (India and South Asia), Euronet Worldwide, a provider of global electronic payment services.
In an effort to broaden the issuance of e-RUPI vouchers, Das said non-bank companies could also issue e-RUPI vouchers now.
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