RBI Cracks Down on Digital Lending Apps: Mandatory Reporting from May 13

The Reserve Bank of India (RBI) has issued a significant directive aimed at enhancing transparency and borrower protection in the digital lending ecosystem. As per the new guidelines under the RBI (Digital Lending) Directions, 2025, all regulated entities (REs) must report the details of their Digital Lending Apps (DLAs) on the RBI’s new Centralised Information Management System (CIMS) portal starting May 13, 2025. The step seeks to build a more trustworthy lending environment and reduce the risks associated with unregulated apps and unfair practices.

Why in News?

The RBI has launched a centralized portal — CIMS — that mandates all regulated lenders to upload information regarding their digital lending platforms by June 15, 2025. A public directory of DLAs will be published on July 1, 2025, allowing borrowers to verify the legitimacy of lending apps. This is seen as a timely intervention to curb rising complaints about unauthorized digital lenders, data privacy violations, and predatory lending practices.

Key Provisions of the RBI (Digital Lending) Directions, 2025

Reporting Mandate for REs

• All RBI-regulated entities must submit the list of their Digital Lending Apps (DLAs) to the CIMS portal.
• Portal goes live: May 13, 2025
• Deadline for first reporting: June 15, 2025

Public Directory of DLAs

• RBI will publish a public directory of approved DLAs on its website by July 1, 2025.
• The directory will serve as a verification tool for borrowers.
• RBI will not vet entries — the list will reflect data “as is” uploaded by REs.

Transparency in Loan Aggregation

• If a Lending Service Provider (LSP) works with multiple lenders, all loan offers must be digitally displayed.
• Apps must list matched and unmatched lender names.

Stricter Due Diligence for Partners

REs must assess third-party LSPs for,

• Technical capability
• Data security
• Privacy compliance

Objectives of the Move

• Prevent misuse of borrower data.
• Address complaints around hidden charges, aggressive recovery, and fake apps.
• Enhance borrower protection and instill trust in digital finance.
• Promote responsible innovation in the fintech sector.

Static Background Facts

• Digital Lending in India has grown rapidly post-2020, especially via mobile apps.
• RBI issued initial digital lending guidelines in September 2022, focusing on direct loan disbursal and repayment through bank accounts.
• The new 2025 Directions build upon these rules with focus on centralised oversight and borrower awareness.

Significance

• Ensures safe lending practices and consumer rights.
• Curbs fly-by-night operators exploiting gaps in digital finance.
• Supports RBI’s vision of a transparent, accountable, and regulated digital credit ecosystem.