Digital Lending Guidelines, 2025 by RBI - Ayaan Finserve India

Understanding the latest RBI Guidelines for Digital Lending, 2025

The next stage of India's digital lending journey is being shaped by the RBI Digital Lending Guidelines, issued by the Reserve Bank of India. In a historic move forward for digital finance, the RBI released the RBI Digital Lending Directions Report, 2025 on May 8, placing borrower protection, platform responsibility, and transparency at the heart of operations for all Regulated Entities — including NBFCs

Why RBI’s Digital Lending Directions is an essential move?

With widespread smartphone use and innovative credit models in the country, our digital lending ecosystem is growing quickly – at an unprecedented rate. However, the need for clear RBI guidelines on digital lending has grown due to concerns around data privacy, opaque lending models, and aggressive recovery practices – now rampant in the industry.

Who Is Covered Under the RBI Guidelines?

The Digital Lending Directions, 2025, present a thorough framework that targets all REs, including banks, cooperative banks, and NBFCs, as well as their relationships with Lending Service Providers (LSPs). These directions apply to both balance sheet lending and passthrough models, mandating compliance across the entire digital lending lifecycle.

Which lending activities are covered under this scope?

The RBI guidelines for loan apps apply to all digital loans dispensed through DLAs (Digital Lending Apps) that involve regulated companies (REs) or their LSPs. They also cover multi-lender platforms, requiring full transparency on loan comparisons. If any digital channel is used for loan sourcing, processing, servicing, or recovery, it falls under these directions

RBI’s 2025 Digital Lending Rules Explained

1. Transparency and Fair Practice

Transparent Multi-Lender Platforms: LSPs working with multiple lenders must display unbiased loan comparisons, ensuring no hidden defaults or manipulative design. No auto credit limit hikes: Banks and lenders can no longer raise your credit limit without asking you first — you'll need to give clear permission before they make any changes. Penal charges disclosure: Charges must be disclosed event-wise through the KFS format, replacing annualized interest representations.

2. Borrower Protection Measures

Cooling-off period: Borrowers can leave their loans without incurring penalties for a board-approved cooling-off window (minimum of one day). Lenders can only charge a one-time processing fee if they've clearly informed you about it in advance.

Mandatory DLA reporting: All DLAs must be registered and reported to the RBI's CIMS portal to ensure traceability - By June 15, 2025, Every lender must comply with the FLDG RBI guidelines by maintaining a board approved default loss guarantee (DLG) policy that lays out terms, exposure caps, and governance protocols.

3. Data Privacy and Security

Data localization: Indian servers are required to keep and hold borrower data. Additionally, it must be returned and erased within 24 hours if it was processed abroad. Consent-based data control: Your data can only be collected if you clearly say yes — and you can change your mind and withdraw that consent whenever you want

4. Grievance Redressal and Compliance

Grievance officers: Both LSPs and REs must designate officers, post contact details on platforms and enable online complaint filing by borrowers. Responsibilities of REs: It is not the LSP, but RE who bears the final responsibility for grievance resolution.

5. Risk Management and Prudential Norms

LSP Due Diligence: it is required by NBFCs to monitor portfolios, carry out routine audits and specify roles in contracts with LSPs. Direct fund flows: To avoid third-party routing, loan disbursements and repayments must - occur directly between the borrower and the NBFC. Cash recovery guidelines: Physical cash recovery is permitted only if the collected amount is credited to the borrower's account the same day, and any recovery fees are borne by the lender, not the borrower

6. Implementation Timeline

RBI has set June 15, 2025, as the deadline for DLA registration on the CIMS platform.Platforms must comply with all other provisions and enable multi-lender transparency byNovember 1, 2025

How AFI Aligns with RBI’s Digital Lending Framework to Empower Borrowers

The RBI-registered NBFC Ayaan Finserve India (AFI) welcomes the RBI digital lending guidelines issued under the Digital Lending Directions, 2025 - as a positive step towards promoting borrower trust and industry responsibility. AFI reaffirms its commitment to responsible credit through full compliance with the digital lending guidelines RBI has outlined for NBFCs and platforms.

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Frequently Asked Questions

1. What is cooling-off period for digital loans in 2025?

According to RBI's 2025 guidelines for digital lending, the minimum cooling-off period for all types of loans is reduced from 3 days to 1day. This is for loans with tenors of seven days or more.

2. How do I know if a digital lender is regulated by the RBI?

It is possible for you to check the list of REs and DLAs associated with them on RBI’s website. Moreover, if the lender is an NBFC – like AFI, you can make sure it is listed under "Regulation → Non-banking" on the RBI's website.

3. Can digital lenders ask for biometric data?

No. Digital lenders are not permitted to gather personal or biometric data – until and unless you have specifically provided consent to do so. Borrowers have full control over their data – including the ability to revoke consent. Also, any data processes outside of India must also be deleted or returned within a period of 24 hours – and this information can only be kept on Indian servers.

4. What is KFS (Key Facts Statement) and why is it important?

KFS is a document that a bank provides which summarises the key characteristics and conditions of a loan - ensuring borrowers have a clear understanding of the product they are considering by providing an overview of the key information regarding the loan.

5. How do the new RBI guidelines affect my chances of getting a personal loan?

Under the RBI’s new guidelines, lenders will now have to adhere to increasingly stringent due diligence and procedures. This is designed to make digital lending safer, more equitable and more transparent. New stringent procedures may increase your access to fair credit – essentially resulting in more legitimate offers, fewer hidden fees, and decisions based on your actual creditworthiness.

6. What should I do if I have a complaint against a digital lender?

You can easily file a complaint against any digital lender in India via RBI’s Complaint Management System (CMS). If in any case the lender does not address your complaint within a period of 30 days, you can then file a complaint with the Banking Ombudsman

7. Are all digital loan offers required to be shown to the borrower?

Digital lenders are supposed to give borrowers a clear digital view of all loan offers clearly and transparently, even if those from lenders the borrower did not directly select. Owing to the new RBI guidelines, it is required to display names of lenders whose offers do not correspond with the borrower's request

8. What role do the new RBI rules play in protecting personal data?

New RBI’s guidelines for digital lending in 2025 - puts borrower consent, data privacy, security, and transparency first. This guarantees that the borrowers receive signed loan documentation, restrict access to sensitive info including call logs, contact, and warrant stringent due diligence procedures for digital lending providers.