Digital Lending Directions, 2025

Largely a consolidation; New rules on multi-lender platforms and lending apps

– Aditya Iyer, Manager (Legal), Tejasvi Thakkar, Assistant Manager | (finserv@vinodkothari.com)

Background

On May 08 2025, the RBI notified the Digital Lending Directions, 2025 (‘Directions’). At the outset, it is worth noting that the Directions are not a regulatory overhaul of any kind; they are rather a consolidation of the extant regulations (including the FAQs), with certain key additions relating to multiple lender platforms as well as disclosure on DLAs to RBI, along with the certification from CCO. Further, the fact that the FAQs have also been integrated into the regulation signals the RBI’s intent to impart seriousness to its FAQs.

Below, we analyse the key changes, along with the compliance implications they present for REs.

Effective Dates

1. All paragraphs of the Directions, except for Para 6 (Multiple Lender-LSP Arrangements) and Para 17 (DLA Reporting Requirements) are effective immediately.
2. Para 17: Reporting in respect of all DLAs on the CIMS portal to be completed by June 15, 2025
3. Para 6: November 01, 2025.

Snapshot of key additions

1. Multi-lender platforms: In case of RE-LSP arrangements involving multiple lenders, there are additional compliance requirements prescribed upon the REs. For reference, these multi-lender platforms are essentially “loan marketplaces” hosted by the lending service provider for the various lenders it partners with. These platforms often match the onboarded consumer with a lender meeting their specification (and vice versa for the lender), or enable the consumer to make a selection basis a given range of choices.

It is to be noted that these platforms are unlike a traditional e-commerce marketplace which operates as an intermediary (a concept we have discussed in detail in our earlier write-up, which can be read here). Here, the REs contract with the service providers/platform for sourcing customers through the platform, and for the platform/service provider to provide services to customers on behalf of the RE, thus making them LSPs.

REs contracting with such LSPs, shall ensure that their platforms protect the customer’s right to choose, without using any dark patterns and deceptive practices, and that such platforms display all the information required for the customer to make a free choice (including APR, penal charges, loan tenure, etc.)

The rationale behind creating rules for multi-lender platforms seems to be as follows:

• Unbiased Interface: The LSP representing and hosting multiple lenders on its platform should not have differential arrangements with certain REs which promote said REs on the platform to the exclusion of others.
• Information asymmetry: By compelling the platform to disclose all the lenders, and all the available choices, the borrower’s information asymmetry is reduced (i.e. there is parity in the information available to them).

2. Reporting of the DLAs: REs shall report to the RBI information about all the DLAs engaged by them, in the prescribed format under the Directions.
3. Extended responsibilities of the CCO: In connection with the reporting of DLAs, the CCO (or other officer designated by the RE) shall be responsible to make certain certifications, including:
   1. Certification that data submitted on DLAs via CIMS portal is correct;
   2. Certification that DLAs are complying with the applicable law and regulatory requirements (including under the Directions). This appears to be an extensive regulatory certification to be done by the CCO, which may likely include assessing the DLA’s compliance with/against following circulars:
      • Digital Lending Directions, 2025;
      • Annex XIII of the SBR Directions – Instructions for outsourcing of financial services;
      • Master Direction on Outsourcing of Information Technology Services;
      • Digital Personal Data Protection Act, 2023;
      • Consumer Protection Act, 2019;
      • Consumer Protection (E-Commerce Rules), 2020;
      • Guidelines For Prevention and Regulation of Dark Patterns.

This would also seem to require the REs to conduct a very substantive “digital lending audit” or other similar assessment on the LSPs. This also assumes greater significance in light of the evolving approach of the regulator, which reportedly includes engaging directly with the LSPs whilst auditing the NBFC.

A snapshot of all the changes in the Directions is discussed in the table below:

Other resources on the topic: