Principles of Neutrality for Multi-Lender Platforms

Aditya Iyer | Written for finserv@vinodkothari.com

This present write-up attempts to underscore the importance of platform-neutrality in multi-lending platforms (i.e., digital platforms where a borrower is able to choose from the loan offers made by multiple lenders against a requested product). It assumes relevance because the sincere borrower places their faith in these platforms, and hence should receive truthful and unbiased information necessary to enable informed decision-making. The article assumes contemporary significance in view of November 1, 2025, applicability of Para 6 of the Digital Lending Directions, 2025.

In the case of a lending application that is not multi-lender, the question of the borrower’s decision-making being impaired is not as pertinent since they do not have much of a choice regarding various loan products or lenders.

We have previously discussed the same from the standpoint of regulatory compliances to be ensured by the lenders and their LSPs under Digital Lending Directions, here. Hence, the instant write-up focuses on fundamental considerations from a principles standpoint, that one must not lose sight of while operating such Multi-lender platforms. 

I. A First-Principles Background

Why do we visit a marketplace, rather than shop from a particular retailer? One’s Diwali shopping, for instance, could be done solely on one particular brand’s website. Why bother visiting the mall or browsing through different labels on Amazon? There may be several reasons, but they all largely centre on the consumer’s desire to make an informed decision after comparing the available options and getting the best bargain. Such forums also promote competition amongst the different sellers and fuel the engine of innovation.

A similar desire naturally propels the customer who goes onto a lending marketplace to compare the offerings of various lenders and avail the desired credit facility. At this point, what is spoken of specifically is the “multi-lending marketplace”, i.e, a forum where a borrower has multiple contending lenders against a given loan request. And here, unlike some festive garments, the consumer’s personal finances, aspirations, and future creditworthiness are at stake.

The role of the marketplace in such cases would be intermediation and facilitation of the financial services. In case, however, it ends up using its forum to favour and promote certain lenders unequally, or alter the prices of the products (sold by merchants) in a manner commercially favourable to itself, while still representing itself to be a neutral forum, it would subvert the principles of fair competition.

It would also be deceitful to the customer, who is under the impression that they are receiving a fair and accurate representation in terms of prices and quality.

Thus, it is clear that the platform has a duty of transparency and fairness towards the borrowers and the lenders who are onboarded. This is the spirit that abides as the undercurrent of platform regulation in digital lending; the rest is commentary.

It must also be noted that offers made on loan platforms are final, such that it is the borrower who makes the choice, and not the lender. The lender has presumably already made the choice of offering the loan to the borrower; otherwise, there was no question of displaying the loan offered by the particular lender. Therefore, once the platform displays the names of various lenders offering the loan, the platform is making loan offers on behalf of different lenders. The platform is admittedly an agent of the multiple lenders, and has been empowered by the respective lenders to make loan offers. Therefore, once the platform displays multiple loan offers, the platform is acting in the capacity of an agent and is displaying the loan offers from each of these lenders. It is not proper to take a position that these offers are merely indicative, and the lenders have the option of rejecting the borrower after their loan offers are displayed and selected. This position emerges from a reading of Para 6(i) and (iii) of the Digital Lending Directions, 2025.

A multi-lender platform approaches the borrower with the premise that there are several lenders whose offerings for a potential loan are available, such that the borrower can get the best deal, which he then selects. This is different from a single lender app, where the borrower is fully aware that he is approaching a single lender. In order for a platform to answer the basic attributes of a platform, the platform must adhere to some of the essential principles:

• neutrality
• comparability
• no leveraging of borrower information to gain unfair advantage, etc.

Some of these features of e-commerce platforms were discussed by CCI in Market Study on E-Commerce in India.

II. What does neutrality mean here?

“Neutrality” here simply means that the platform remains unbiased and neutral to the interests of the parties, without using its position to promote/advantage any party (including itself) to the exclusion/disadvantage of the other, while it is still representing itself to be a neutral platform. Neutrality is one of the essential tenets of claiming to be a platform, and not being neutral will be a contradiction in terms.

III. Common scenarios where a lending platform’s neutrality may be vitiated

Some scenarios where a lending platform’s neutrality may be vitiated are as follows:

1. In case the products of certain lenders are being promoted to the exclusion of other lenders, potentially owing to the commission or fees received from such lenders.
2. Where the platform has a parent or subsidiary that is a lender, favouring such lender’s products by the platform (whether explicitly or tacitly).
3. Where the platform alters the competitive conditions amongst the various lenders, and attempts to neutralise the competitive aspects of their offerings by showcasing the loan products of different lenders at the same terms (say, for instance, by adjusting the commission payable by the lender to the platform with the rates of interest, such that the same ROI and other terms are offered by all lenders).
4. Where, through the use of dark patterns or deceptive design practices, the decision-making of the consumer is subverted.
5. Where crucial information pertaining to the loan product (such as tenure, APR, any hypothecation of goods, etc) are deliberately masked, concealed, or distorted by the platform.

IV. Principles of neutrality for lending platforms

Drawing from global norms (pertaining to platform regulation), RBI regulations, consumer protection law, and antitrust law, one may synthesize the following principles of neutrality for lending platforms:

1. Objectivity: The content displayed by the platform “shall be unbiased, objective and shall not directly/ indirectly promote or push a product of a particular RE, including the use of dark patterns/deceptive patterns designed to mislead borrowers into choosing a particular loan offer” (see Para 6 of the Digital Lending Directions, and Para 7 of the Draft NBFC-Credit Facilities Directions, 2025)

2. Competitive conditions & fairness: Platforms should not enter into arrangements with lenders which would have the effect of distorting competitive conditions, and creating an “appreciable adverse effect on competition”. For instance, if the lenders are charging different rates, the platform adds its own differential fees (may be in one or more forms – platform fees, servicing fees, etc) to equate the rate that is finally offered to the borrower. For example, three lenders, L, M, and N, are on the platform, respectively expecting 13%, 14% and 15% return on specific qualifying loans, the platform adds a 4%, 3% and 2% fee, respectively, such that the APR offered to the borrowers is exactly 17%. Here, all lenders offering the same terms of loan to the borrower would not just kill the competition but also leave the borrower with no possible choice or selection as such. These may be perceived as a vertical restraint, and in cases of large platforms, as an abuse of dominant position [Section 3(4) and Section 4 of the Competition Act, 2002].

Additionally, neutrality also predicates that there is no preferential positioning so as to enable fair and free choice of the consumer affected. Preferential listing of products in particular may give rise to an investigation and penalty under the Competition Act (see here). It is not necessary that such agreements be written and formalised; indeed, as observed by the Competition Commission of India:

“The definition of ‘Agreement’ under the Act is an encompassing/inclusive one. It includes any arrangement, understanding, or action in concert, neither necessarily in writing nor intended to be enforceable by legal proceedings”.^[1]

3. Comparability & transparency: Borrower should be provided with all the information required to enable informed decision making. Non-disclosure of the essential loan terms being offered by the lenders shall impact the right to choose of the borrower. The essential terms include details of the sellers, and salient details of the loan product by way of KFS (such as APR, ROI, penal charges, etc) (see Para 6 of the Digital Lending Directions Draft and Para 7 of the Draft NBFC-Credit Facilities Directions, 2025)

4. Competitive prices and terms of the loan: Platforms need to ensure that the borrower’s right to be assured of access to services at competitive prices [see Section 2(9) of the Consumer Protection Act, 2019] is not vitiated by the platform. Further, platforms should not “manipulate the price of the goods or services offered on its platform in such a manner as to gain unreasonable profit by imposing on consumers any unjustified price having regard to the prevailing market conditions, the essential nature of the good or service” [from the rules applicable to E-Commerce platforms, see Rule 4(11) The Consumer Protection E-Commerce Rules, 2019].The whole purpose of the platform was to offer competing loans to the borrower, however, the act of equating the rates by the platform is against competition principles. In such a case the rate is, in true sense, being decided by the platform and not the lenders, which would be breaching the principle of neutrality. At the same time, with the same borrower, the fee being charged by the platform should not be different across lenders. If the platform is absorbing credit risk to the extent of first loss, the cost of that risk cannot be different for different lenders, with the same borrower. Neither is the cost of sourcing or servicing different. For the lenders, it is essential that the pricing of the loan has to reflect the cost of capital, risk premium, etc. The lenders will find it difficult to justify the cost charged to the borrower, as the differential fee is serving to equate the loan offers.

5. Non-discrimination amongst the borrowers: Borrowers belonging to the same class should not be discriminated against. For instance, where the borrowers belong to the same rank in terms of creditworthiness, other data (such as their spending history, websites accessed, etc) should not result in them receiving higher rates of interest, or additional charges for the facility (merely because it is indicative of a greater spending power). [see Rule 4(11) The Consumer Protection E-Commerce Rules, 2019].

On the question whether E-Commerce Rules are applicable to multi-lender platforms, even if there is some opacity currently, at least the basic principles applicable to such platforms should apply to every platform – be it a loan platform, bond investment platform, platform for travel tickets, insurance policies, or likewise.

V. Comparative responsibilities at a glance

For the reader’s ease of reference, a comparative table of different lending platforms is given below:

	Single Lender DLA	Non MLL Marketplace	Multi-Lender Lending (MLL) Marketplace
Meaning	A single lender operates a Digital Lending App to source and service customers. This is not a lending marketplace as such.	Although various lenders may be onboarded onto such a platform, against a requested facility, there would not be multiple lenders. For e.g., Lender A offers gold loans, Lender B offers vehicle loans, etc.   Hence, in such cases, the consumer would not have to choose between the offerings of multiple lenders.	A multi-lender marketplace would intend to offer multiple loan options from different lenders   For instance, when a consumer requests a gold-loan facility, they may have offers from Lender A, B, and C.
Duties of the lender and platform	Lenders would need to ensure that the compliance obligations relating to the use of DLAs are discharged.	There would be obligations upon both the lender and the platform.   The lender would need to ensure obligations emanating from RBI regulations and consumer protection law are discharged.   However, given that the platform is operating a forum facilitating trade in lending services, in our view, it should ensure adherence to the principles and rules under the E-Commerce Rules, 2020.   Note: In our view, the compliances under Para 6 of the DL Directions would not be attracted in this case, as it is not a multi-lender LSP.   For more on this, see our explainer here.	Here, in addition to the regular compliances applicable to digital lenders, the following would apply:   On lenders: Lenders would need to ensure compliance under Para 6 of the Digital Lending Directions, 2025.    On the platform itself:  In addition to the aforementioned consideration from E-Commerce Rules, the following principles should be ensured: ObjectivityPromote competitive conditions and fairness Comparability and transparency  Access to competitive pricesNon-discrimination amongst the borrowers
Position of the platform owner as an LSP	No, if the DLA is that of the lender; yes, if the DLA is that of a different entity	Yes	Yes

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^[1] Delhi Vyapar Mahasangh and Flipkart Internet Private Limited and ors.