What are the RBI regulations on digital lending in India?


Digital lending is the process of disbursing and collecting loans through websites or mobile applications. The Reserve Bank of India (RBI) has established a regulatory framework for digital lending. Its new regulations are based on the recommendations of a task force on “Digital lending, including lending via online platforms and mobile applications”, which was formed in January 2021.

Who exactly are digital lenders?

The RBI has divided digital lenders into three categories:

  1. Entities regulated by the RBI and authorized to carry out lending activities.
  2. Entities authorized to lend under other legal or regulatory provisions but which are not subject to RBI regulation.
  3. Entities lending without regard to legal or regulatory provisions.

Digital Loans in India:

Digital lending involves granting and repaying loans through web platforms or mobile applications. This allows for faster disbursement and helps reduce costs.

Lending Service Providers (LSPs) work with non-banking financial companies (NBFCs) to provide credit to customers through the latter’s platform. However, these platforms frequently engage in risky lending practices, such as lending beyond the borrower’s repayment capacity.

What are the new guidelines?

The Reserve Bank of India released the Digital Lending Guidelines on September 2, 2022. These guidelines require significant changes in the way fintechs (LSPs) and regulated entities (banks and NBFCs) are expected to manage their lending operations. digital loans.

Read more about RBI’s latest guidelines for digital lending:

RBI Guidelines

How can we help banks and NBFCs adhere to the above guidelines?

To comply with the above regulations, you must use a digital signature. We offer FIPS 140 2 Level 3 HSM and Cloud HSM to secure digital signing and protect the private keys associated with your signing application, which can protect against key theft or compromise.

HSMs provide the secure environment needed to create and safeguard the cryptographic keys used to secure and validate sensitive data, used in digital signing and e-signature authentication. If the cryptographic keys associated with digital signatures are compromised in any way, the entire system will be compromised. As a result, many organizations employ hardware security modules (HSM) to save private keys used in secure digital signatures.

Why is Hardware Security Module (HSM) important for digital signatures?

In order to properly operate reliable and robust digital signature platforms, best practices require the employment of certified, essential and imperative hardware cryptographic technology.

Many people forget the most crucial step after making a significant investment in setting up PKI and digital signature infrastructures: giving these solutions the reliability and security they need by using the crucial component, the HSM or Hardware Security Module to securely store master keys and generate all private keys needed for the procedure.

The importance of hardware security module in digital signatures:

  • Keep keys and certificates, and other cryptographic data, secure.
  • They are carried out using specialized and secure equipment, preventing hacking attempts.
  • Adding an extra layer of protection by separating decryption keys from encrypted data helps ensure data security in the event of a breach.
  • Strengthen key management procedures across the entire key lifespan, from creation to destruction and everything in between.
  • Maintain tight control over the network interface while allowing only limited access.

Benefits of using CryptoBind HSMs for digital signatures:

  • Secure electronic tracking and storage
  • Increase security and compliance
  • FIPS certified
  • Decrease spending
  • Guarantee the integrity of documents

To comply with the new RBI guidelines for digital lending, we are offering Hardware Security Module and cloud HSM to secure the keys associated with your digital signature solution. Contact us to learn more about our solution.

Contact us:

Website: www.jisasoftech.com

E-mail: sales@jisassotech.com

Phone: +91-9619222553

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