Digital Lending Laws in India and Beyond: Scrutinizing the Regulatory Blind Spot

Abstract

With the introduction of the digital fintech ecosystem in India, there has been a paradigm shift in traditional banking practices, one of which is the complex and time-consuming lending procedure in India. With the popularization of digital credit, lending has become more accessible to the general public and has catered to the demands of the larger population who could not access this service in the past. Although this is a booming industry with an estimated size of 270 billion dollars in the year 2022 itself, India's regulatory framework cannot keep pace with this sector's growth. It has been a concern for both the industry and the customers. The present paper examines the current regulatory regime governing digital credit in India with a special focus on the RBI Guidelines on Digital Lending, 2022, and provides a comparative analysis of the regime with foreign laws. The paper also provides for the regulatory gap in these laws in India and attempts to provide suggestions to make the law more efficient and effective. The study utilizes a doctrinal research approach, which involves an extensive review of the literature and analysis of the regulatory framework in India and foreign countries and highlights the challenges faced by the digital lending industry of India. Furthermore, this study's findings have significant implications for policymakers, digital lending platforms, and consumers in India.