InvestorQ : Do you thing it is too early to regulate the digital lenders?
Sam Eswaran made post

Do you thing it is too early to regulate the digital lenders?

Moii Chavate answered.
2 months ago

I would look at it differently and believe that the timing of the regulation is just about right. Digital lending in India has proliferated since millions of Indians don’t qualify for bank loans due to low credit score. In such cases, the digital lending comes as a blessing in disguise. However, the problem is that such loans often comes at a very steep cost. Problems like usurious interest rates and daily compounding are rampant. It is impossible for borrowers to repay these kinds of interest rates and leads to default and resultant problems

The simple answer is to regulate such entities with a broad framework for regulation. One possible outcome of this move would be that many of the smaller and marginal players in digital lending would get eliminated along the way. However, that would only make the digital lending business healthier. RBI has taken the right step by regulating digital lending activity before it actually burgeons into a major challenge. The real challenge now is on getting the implementation right!