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RBI consolidated digital lending regulation into a single 2025 Direction, tightening cooling-off periods, DLA reporting, and LSP conduct rules. CS Chetna Shoor structures your RE-LSP arrangement, KFS format, and compliance calendar against the current framework, not the superseded 2022 guidelines many platforms were originally built around.
The RBI (Digital Lending) Directions, 2025, effective May 8, 2025, replaced the September 2022 Digital Lending Guidelines and the June 2023 Default Loss Guarantee framework, consolidating digital lending regulation into a single rulebook covering RE-LSP arrangements, direct fund flows, Key Fact Statements, cooling-off periods, and DLA reporting to RBI’s CIMS portal. This applies to every regulated entity — bank or NBFC — originating term loans through a digital channel, whether through its own app or via a Lending Service Provider (LSP), and it makes the RE directly responsible for LSP conduct, not just for the terms of the partnership contract.
This page is for NBFCs and banks launching or restructuring a digital lending product, and for LSPs and fintech platforms partnering with a regulated lender, who need the RE-LSP agreement, KFS format, DLG structure, and reporting obligations built to the current 2025 Directions rather than the superseded framework. Chetna reviews your existing arrangements against the current rules and structures what’s missing before RBI or a compliance audit catches the gap.
Board-approved cooling-off period for every digital loan, regardless of tenor
Disbursal and repayment must move directly between borrower and RE, no LSP pass-through accounts
Mandatory disclosure of all-in cost, APR, and repayment schedule before the borrower accepts
Every DLA used by an RE or its LSPs must be reported to RBI's Centralized Information Management System
Maximum time data may sit on a foreign server before deletion and return to India
Legal basis, effective May 8, 2025, replacing the 2022 Guidelines and 2023 DLG framework
RBI rejects over 40% of NBFC applications on the first attempt. Here’s what actually causes it.
Since November 2025, LSPs partnering with multiple regulated entities must disclose all potential lenders and rank offers only by a publicly disclosed, unbiased metric. A platform that quietly favors one lending partner over another is now a direct compliance violation, not just a commercial judgment call.
REs are directly accountable for how their LSPs behave with borrowers, including recovery practices and data handling. On-paper due diligence at onboarding isn't enough — ongoing monitoring of LSP conduct is the RE's operational problem to solve, not just a contractual assurance to obtain once.
The Directions consolidated several older circulars — the 2022 Guidelines and the 2023 DLG framework — into one document with some genuinely new requirements. Platforms that assume their existing compliance controls carry over without re-checking each clause risk gaps in exactly the areas that changed.
The framework applies broadly, but with specific exclusions worth knowing.
The Directions apply in full, whether you're lending through your own app or an LSP partnership.
Bound by the RE-LSP agreement and RBI's conduct rules, even though LSPs aren't directly regulated entities themselves.
Credit cards (governed by separate card regulations), peer-to-peer lending, and merchant Buy Now Pay Later products fall outside this framework's scope.
We review your current DLA and LSP arrangements against the 2025 Directions, flagging gaps against the superseded 2022 framework.
Agreement review or drafting, alongside Key Fact Statement format design aligned to RBI's standardized requirements.
Direct disbursal/repayment architecture review, and Default Loss Guarantee structuring if your arrangement includes one.
All DLAs registered on RBI's CIMS portal, alongside cooling-off and grievance redressal policy finalization.
An operational framework for monitoring LSP conduct, not just onboarding due diligence, plus direct handling of any RBI queries.
Digital lending compliance is an ongoing discipline, particularly given how frequently this framework has changed in recent years.
Ongoing CIMS reporting as DLA and LSP partnerships change over time.
Periodic re-mapping of controls against new RBI circulars or amendments.
LSP conduct monitoring as a continuous operational process, not a one-time onboarding check.
Coordination with your broader RBI compliance program. See NBFC Annual RBI Compliance.
CS Chetna Shoor’s team replies within 4 hours on WhatsApp.
The RBI (Digital Lending) Directions, 2025, effective May 8, 2025, consolidated and replaced the September 2022 Digital Lending Guidelines and the June 2023 Default Loss Guarantee framework into a single rulebook. It governs RE-LSP arrangements, fund flows, Key Fact Statements, cooling-off periods, and reporting of Digital Lending Apps to RBI.
Borrowers must be given a board-approved cooling-off period of at least one day, regardless of the loan’s tenor, during which they can exit the loan without penalty beyond a disclosed one-time processing fee. This is a reduction and standardization from the earlier framework, which had varied by loan tenor.
No. Disbursal and repayment must flow directly between the borrower and the regulated entity’s bank account, with no pass-through via an LSP’s or any third party’s account. Any fees owed to the LSP must be paid by the regulated entity directly, not collected from the borrower by the LSP.
A Default Loss Guarantee, also referred to by its earlier name First Loss Default Guarantee (FLDG), is an arrangement where an LSP or partner provides a guarantee covering a portion of loan losses for the regulated entity. RBI’s 2025 Directions set specific eligibility, due diligence, structural, and disclosure requirements for these arrangements, including caps and NPA recognition rules.
No. The 2025 Directions explicitly exclude peer-to-peer lending and merchant Buy Now Pay Later products from their scope, alongside credit cards, which are governed by separate card regulations. The framework applies specifically to term loans disbursed through digital channels by regulated entities.
Qualified Company Secretary · ICSI Member · Founder, Expertvuw Management Pvt Ltd
Chetna has guided NBFC promoters through RBI’s COR process end to end, with particular focus on structuring the Net Owned Fund and business plan so the application survives first-round RBI scrutiny rather than coming back with a query.