The Fintech Association for Consumer Empowerment, or FACE, has applied to the Reserve Bank of India (RBI) to become a self-regulatory organization (SRO) in the digital lending space. It comes after a central bank working committee tasked with researching digital lending in the regulated financial sector and by unregulated entities urged the formation of SROs, among other things, to keep track of the actions of digital lenders.
As financial misery overtook the country during the pandemic, the number of lending apps skyrocketed. However, several apps were engaging in unethical tactics such as charging high prices, employing unlawful recovery methods, etc. According to the central bank’s working group report, between January 1, 2021 and February 28, 2021, there were over 1,100 lending apps for Indian android users in over 80 app shops. There were 600 of them who were breaking the law. The RBI received hundreds of complaints after issuing a cautionary circular in late December 2020.
According to the RBI working group’s report from November of last year, An SRO covering digital lending applications/loan service providers in the digital lending ecosystem is now recommended. In the case of RBI-regulated entities and their outsourced agents, the RBI may provide general guidance and recognize such an SRO. The government may also take similar action in the case of digital lending business conducted by entities that the RBI does not regulate.
FACE is a non-profit industry group founded in September 2020 to encourage ethical lending standards among the country’s digital lenders. The organization collaborates with the regulator (RBI), industry actors, and other stakeholders to address consumer protection and eliminate fringe elements undermining consumer faith in the system. FACE members include EarlySalary, Kissht, LoanTap, Cashe, KreditBee, PaySense, StashFIN, CredAvenue, and a few others.
Ram Rastogi, a member of FACE’s Governance Council, stated that they plan to collaborate with the RBI and all official stakeholders to promote responsible lending, ensuring ethical lending practices, data security, cyber security, consumer privacy, and the abolition of predatory lenders.
FACE stated that it has a total consumer base of over 9 million people spread across 19,000 pin codes across the country. Its members respect and follow the organization’s code of ethics, which directs them to use responsible and ethical lending methods. It is also adding new member companies to its fold to add value to the body’s mission and objectives.
About Fintech Association for Consumer Empowerment (FACE)
The FinTech Association for Consumer Empowerment (FACE) is a non-profit organization that advocates for Consumer Lending FinTech companies’ common concerns with regulators, media, listing or distribution platforms (such as Google Play Store), and other external stakeholders. The association, which was formed in September 2020, is made up of industry leaders in the FinTech Lending space and aims to serve as a bridge between lending entities and consumers on the one hand, and banks/NBFCs, regulatory bodies, government, media houses, and listing platforms on the other.
For more information, visit https://faceofindia.org/