Mumbai: The Digital Lenders Association of India (DLAI) and the Small Industries Development Bank of India (SIDBI) have signed an agreement to collaborate to boost digital adoption in lending and develop policies to protect consumer interest. SIDBI will also explore offering its credit products to micro-enterprises through fintechs that are DLAI members.
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The event, where SIDBI and DLAI entered into a memorandum of understanding to collaborate, was organised by DLAI in Goa on September 23, 2023. DLAI’s latest version of the industry code of conduct (CoC) was launched by Sivasubramanian Ramann, chairman and managing director of SIDBI, at an event that was attended by the top 100 executives of the Indian fintech industry.
The new version of CoC is structured around the RBI’s Digital Lending Guidelines. It considers important aspects such as responsible lending, transparency, fair debt collection practices, data privacy and security, and compliance with the regulatory framework.
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“High growth in the Indian Fintech sector has been driven by best-in-class Public Digital Infrastructure (PDI) and matured policy support from the regulator. It’s for the industry to leverage the RBI’s digital lending guidelines to develop responsible lending practices, and the code of conduct prepared by DLAI is an important first step in this direction,” said Ramann.
The MoU envisages collaboration between DLAI and SIDBI to develop standard protocols to expedite the adoption of digital lending partnerships, including alliances between banks and lending service providers (LSPs), co-lending collaborations, and developing model partnership agreements. SIDBI will support DLAI in its interventions in client protection, customer Grievance redressal mechanism, financial literacy, research and publications.
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The development institution will also explore partnerships for its “Prayaas” scheme for informal enterprises, co-lending, GST Sahay, Express loan, green financing and other direct credit schemes SIDBI. Eligible DLAI member NBFCs can also look forward for liquidity support from SIDBI and explore assignment and securitisation transactions.
“SIDBI is the apex Institution for the development of the MSME sector in the country. This partnership signifies an important step in India’s fintech journey for enhancing its role in financing the MSME sector. Both organisations are committed to leveraging our combined expertise and resources to pit the sector on a high growth trajectory with responsible lending with innovation embedded therein,”. Said Jatinder Handoo, CEO, DLAI.
