The Reserve Bank of India has told finance companies to stop including default loss guarantees from fintech firms when calculating stressed loan provisions. This change affects digital lending companies. Non-banking financial companies now have to set aside full provisions for these loans, reducing their attractiveness for new business.
The Reserve Bank of India (RBI) has told finance firms to leave out default loss guarantees (DLGs) offered by fintech companies when setting aside funds for troubled loans. This order is a blow to independent digital lending firms, making it harder for them to operate under current rules.
Industry experts say non-banking finance companies (NBFCs) will need to set aside full provisions on loans taken from these platforms. This move will make these loans less attractive for new business. The change could impact how NBFCs attract customers and manage risks.