Within a month of the Reserve Bank of India (RBI) releasing digital lending guidelines, payment aggregators have decided to approach the central bank seeking relief.

Under the new RBI guidelines, all loan disbursals and repayments would need to be executed between the bank accounts of the borrower and the RE without any pass-through/ pool account of the LSP or other third party. 

While the role of payment aggregators have been eliminated in the transactions, the aggregators and their lobby group Fintech Association for Consumer Empowerment (FACE) are seeking a relaxation of these norms, Economic Times reported.

The RBI has completely ignored the role of payment aggregators and all intermediaries, a payment aggregator executive said as quoted in the report. Hence, they want to understand their roles under the new framework and why their role has been eliminated.

In January 2021, the RBI had constituted the working group to prepare a draft report on digital lending, including lending via online platforms and mobile apps. The submitted report was then opened for comments from stakeholders and members of the public. 

While a part of the industry has welcomed the new guidelines saying RBI has recognised the role of fintechs in the lending ecosystem, the new guidelines have also put pressure on digital lenders and other payment services to chalk up a new business model. 

“Payment aggregators are the chain to execute all sorts of digital commerce. Bringing in such rules disrupts the existing established models that have been working smoothly,” a payment system stakeholder said as quoted in the report.

They will approach the RBI to allow them to process these transactions.

In the fintech ecosystem, digital lending is one of the fastest-growing fintech segments in the country. While the digital lending market size was at $110 Bn in 2019, it is expected to touch a value of about $350 Bn by 2023, as per a Statista report.