The Reserve Bank of India issued revised digital lending guidelines on 1 March 2026 through a Master Direction supplement, building on the Digital Lending Framework first established by the RBI Working Committee report of November 2021 and the subsequent Master Direction on Digital Lending issued in September 2022. The revised guidelines take immediate effect for all Regulated Entities (REs) — banks, co-operative banks, NBFCs, and Housing Finance Companies — as well as their Lending Service Provider (LSP) partners. For the rapidly growing digital lending sector in Delhi NCR's fintech ecosystem, the revised framework introduces compliance requirements that cannot be deferred.
Enhanced EMI Transparency Requirements
The revised guidelines mandate that every digital loan product display a Key Fact Statement (KFS) to the borrower before sanction. The KFS is not new — it was introduced in 2022 — but the revised format is significantly more prescriptive. The KFS must now display: the Annual Percentage Rate (APR) calculated on a standardised methodology prescribed by the RBI, a complete amortisation schedule for the full loan tenure broken down by principal, interest, and fee components, the total cost of credit in rupee terms (not percentage terms only), the implications of pre-payment including any pre-payment penalty computed at the current outstanding principal, and the cost of any ancillary products — such as insurance or subscription services — that are mandatory or offered alongside the loan.
The APR calculation methodology has been standardised to prevent REs and LSPs from presenting artificially low rates by excluding processing fees, account maintenance charges, or insurance premiums from the rate computation. Under the revised guidelines, the APR must incorporate all mandatory charges and fees over the loan lifecycle. LSPs that have been presenting headline rates that exclude fees face immediate product redesign requirements.
Fee Disclosure and Collection Standards
The revised guidelines prohibit the collection of any charge from a borrower that is not disclosed in the KFS at the time of sanction. Post-sanction imposition of fees — including late payment fees restructured as "administrative charges," or convenience fees for digital repayment modes — without prior KFS disclosure constitutes a violation of the guidelines. The RE remains responsible for KFS compliance even where the LSP is the customer-facing party; passing off responsibility to the LSP in internal contracts does not discharge the RE's regulatory obligation.
Collection charges have been specifically regulated. Collection practices that involve third-party recovery agents must comply with the RBI's existing guidelines on outsourcing of financial services. New provisions prohibit recovery agents from contacting a borrower before 8 AM or after 7 PM, from contacting family members who are not co-borrowers, and from using social media or messaging platforms to share default information with persons other than the borrower. Digital lending platforms that have used automated escalation systems — sending default notices to emergency contacts — must disable those features immediately.
Regulation of LSPs and Digital Lending Apps
The revised guidelines tighten the governance framework for LSPs. An RE may not engage an LSP that is not registered with any RBI-recognised self-regulatory organisation for digital lenders (SRO-DL). The SRO-DL is expected to be fully operational by June 2026; in the interim, REs must apply enhanced due diligence to LSP partners. The due diligence must cover: the LSP's data governance practices, its collection practices, its complaint redressal mechanism, and its financial soundness. REs must conduct annual audits of LSP compliance and must terminate partnerships where violations are identified and not remediated within 30 days.
Digital lending apps operated by LSPs must be listed on the RBI's approved Digital Lending App (DLA) register. Apps not on the register may not be used to originate or service loans. Borrowers must be informed at first interaction that the app is RBI-registered and the identity of the RE behind the product must be disclosed prominently — not buried in terms and conditions.
Borrower Grievance Redressal
The revised guidelines require every RE to establish a dedicated digital lending grievance officer — separate from the general customer grievance mechanism — with a 30-day resolution timeline for digital lending complaints. Unresolved complaints must be escalated to the RBI Integrated Ombudsman Scheme. The guidelines also mandate that every digital loan offer include a cooling-off period of not less than three days, during which the borrower may cancel the loan without penalty and repay only the principal disbursed.
Action Items for Fintech and NBFC Businesses in Delhi NCR
- Audit your KFS format immediately against the revised APR calculation methodology and full fee disclosure requirements.
- Identify and remove any charges collected post-sanction that are not disclosed in the KFS — retrospective collection of undisclosed fees is a priority enforcement concern.
- Review LSP contracts to confirm SRO-DL registration obligations are addressed and annual audit commitments are included.
- Disable any automated collection escalation features that contact non-co-borrowers or operate outside permitted hours.
- Verify that all digital lending apps in your distribution chain are listed on the RBI DLA register.
- Appoint a dedicated digital lending grievance officer and update the complaint mechanism to reflect the 30-day resolution standard.