Webinar on KFS & APR – New Rules by RBI on Retail & MSME Lending
-Vinod Kothari and Anita Baid | finserv@vinodkothari.com
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Webinar on KFS and APR– New RBI rules on Retail & MSME Lending
Watch our Webinar here: https://youtu.be/DBCROyxRJEY
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Choppy landing for soft lending: Regulatory concerns on quality of lending
– Vinod Kothari, finserv@vinodkothari.com
Some of the RBI’s recent stringent actions, with stop-business directions, raise an alarm amongst financial sector entities. Are these concerns limited to a particular type of lending, or can they lead to any general observations on the quality of lending? One shouldn’t be tunnel-visioned and believe that these regulatory objections are limited to specific types of collateral – gold lending, IPO funding or loans against share trading. In fact, underlying these concerns is a general philosophy – lenders must do a close introspection of their lending practices.
Read more →Digital Personal Data Protection Bill 2023: Analysing the Impact on Digital Lenders
– Subhojit Shome, Assistant Manager | subhojit@vinodkothari.com
Click here to view our: Consultancy and advisory services on Digital Personal Data Protection Act, 2023
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Workshop on Regulatory Framework for New-age NBFCs
| Register Here : https://forms.gle/C2DQCp5BrAGu9Nry5 |
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Rise, Fall & Subsequent Legitimisation of Default Loss Guarantees
Anita Baid & Subhojit Shome | finserv@vinodkothari.com
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YouTube live: RBI Guidelines on Default Loss Guarantee
Anita Baid in conversation with Vinod Kothari
Live on YouTube – 20th June, 2023 | 5:00 P.M. – https://www.youtube.com/@vinodkotharicompany3966/videos
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FAQs on Default Loss Guarantee in Digital Lending
An understanding of the Guidelines issued by RBI
Team Finserv | finserv@vinodkothari.com
On September 02, 2022, the RBI issued the “Guidelines on Digital Lending” (“DL Guidelines”), which had essentially put a bar on “Loss sharing/ structured default guarantee arrangements” such as First Loss Default Guarantees, likening their nature to that of “synthetic securitisation” as defined under the Master Direction – Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021 (“SSA Directions”). This caused a disruption in the digital lending industry as most of the arrangements ran on some form of loss-sharing arrangement. (Refer to our FAQs on the Digital Lending Guidelines here)
In its Statement on Developmental and Regulatory Policies dated June 8, 2023, the RBI announced its intention to issue a regulatory framework for permitting Default Loss Guarantee arrangements in Digital Lending[1]. The same day, the Guidelines on Default Loss Guarantee (DLG) in Digital Lending have been issued by the regulator (‘DLG Guidelines’).
We have developed a set of FAQs on the DLG Guidelines, where we intend to answer some of the critical questions relating to the default guarantee arrangements.
Read more →RBI to release guidelines to permit default guarantees
The evolution of a concept, from its inception to being prohibited, and ultimately establishing a regulatory framework to allow its practice
– Anita Baid (finserv@vinodkothari.com)
The concept of First Loss Default Guarantees (FLDGs) in the financial industry has experienced a remarkable journey, marked by its inception, subsequent prohibition, and eventually being on the verge of a resurgence with the introduction of a regulatory framework. It had gained significant attention in the realm of fintech industry, whose remarkable expansion in India is largely responsible for propelling FLDGs. Nevertheless, it is essential to note that guarantees are not a novel concept; they have been widely employed in the financial sector for a considerable period of time. (Our article on ‘Lending without risk and risk without lending’ can be read here)
In its Statement on Developmental and Regulatory Policies dated June 8, 2023, the RBI has announced its intention to issue a regulatory framework for permitting Default Loss Guarantee arrangements in Digital Lending. This article delves into the intriguing evolution of Structured Default Guarantees, examining their rise, fall, and subsequent rebirth, shedding light on the regulatory landscape that has shaped their existence.
Read more →Digital lending Balloon: Navigating the path to growth
-Dayita Kanodia, Executive finserv@vinodkothari.com
“Ignoring technological change in a financial system based upon technology is like a mouse starving to death because someone moved their cheese.” – Chris Skinner[1]
Unprecedented growth of the sector
From pawnbrokers lending money in exchange for collateral to the use of sophisticated technologies to carry out credit underwriting, the landscape of lending business has evolved significantly in the last century. Today, it is hard to find a financial institution which is carrying on business without digitising any aspect of its lending process. With rapid advancements in cloud computing, artificial intelligence, and blockchain, as well as faster and more affordable internet connectivity, it is safe to say that the brick and mortar model for lending business will soon be a matter of the past.
The Global Digital Lending Market is valued at USD 11.33 Billion in the year 2022 and is anticipated to reach a value of USD 30.77 Billion by the year 2030. [2]
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