Fintech grouping comes out with code of conduct, after RBI rap

Mumbai: A day after RBI rap, a grouping of five fintechs on Thursday came out with a code of ethical conduct for digital lending which will safeguard consumer rights and interests.

The FinTech Association for Consumer Empowerment (FACE), which claims to be a non-profit body formed by five fintech companies, said the code is aimed to prevent the rise of unwanted practices that could impact the digital lending ecosystem.

The RBI had on Wednesday cautioned public against dealing with unauthorised mobile apps and financial technology firms (fintechs) and not to fall prey to their 'unscrupulous' activities. According to reports, at least three borrowers had committed suicide in Telangana allegedly due to harassment from lenders' representatives to ensure that they pay back.

The RBI circular cited reports that spoke about excessive rates of interest and additional hidden charges demanded from borrowers, adoption of "unacceptable and high-handed recovery methods" and also misuse of agreements to access data on the mobile phones of the borrowers. In a statement, FACE, which is formed by EarlySalary, KreditBee, Kissht, CashE, and LoanTap, said maintaining an ethical code of conduct with "larger accountability and transparency is essential for enabling robust financial inclusion in India".

The code speaks on transparency, disclosure of all costs to customers, pricing and cost of credit, fair treatment, collection, fair treatment, data privacy and resolution of grievances. Under collection practices, it says the members must adhere to a debt collection policy to maintain "highest level of dignity and trust" of customers. "From providing timely and clear information on outstanding dues to providing adequate training for staff and representatives, it should be their top priority to foster confidence and develop a long lasting relationship with the customers," it said.

The body said it is committed to working with regulatory bodies in promoting and monitoring the highest standards of fair practices for strengthening the digital credit lending landscape in India.