RBI Digital Lending Guidelines & FLDG Compliance Checker

Audit FinTech & RE operations against RBI Digital Lending Guidelines. Calculate FLDG 5% portfolio limits, verify direct escrow disbursement routing, and compute Key Fact Statement (KFS) True APR.

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How to Use RBI Digital Lending Guidelines & FLDG Compliance Checker

  1. Navigate to the "DLG Compliance Checklist" to audit operations across direct fund disbursement, borrower consent, privacy, and grievance redressal.
  2. Open the "5% FLDG Portfolio Calculator" and enter the total outstanding loan portfolio to calculate maximum permissible guarantee exposure under the June 2023 circular.
  3. Check guarantee structures against RBI guidelines: Fixed Deposit lien, Bank Guarantee, or cash margin held with the lending RE.
  4. Use the "KFS True APR Calculator" to compute the annualized all-inclusive borrowing cost, incorporating processing fees, verification charges, insurance, and statutory taxes.
  5. Export the generated DLG Audit Sheet and KFS APR Breakdown for credit committees, internal audit, and statutory RBI inspections.

Core Architecture of the RBI Digital Lending Regulatory Framework

The RBI DLG framework establishes a clear separation of roles between Regulated Entities (REs - Commercial Banks, NBFCs) and Lending Service Providers (LSPs). All credit underwriting, credit decisions, and loan agreements must remain the sole responsibility of the RE. Pass-through or pool accounts managed by FinTech intermediaries are explicitly barred, ensuring all financial flows execute via direct bank-to-bank NEFT/RTGS/IMPS rails.

Statutory 5% FLDG Ceiling and Risk Underwriting Restrictions

The RBI circular on Default Loss Guarantee (DLG) issued on June 8, 2023 formalized risk-sharing arrangements between REs and FinTech LSPs. The total contractual guarantee exposure is capped strictly at 5% of the outstanding portfolio. Implicit or unbacked guarantees are prohibited, and REs must verify invocation timelines, capital adequacy recognition, and credit bureau reporting under individual borrower identifiers.

Annual Percentage Rate (APR) Transparency in Key Fact Statements

To prevent predatory digital lending and deceptive nominal interest rates, RBI mandates the computation of the True Annual Percentage Rate (APR). The APR is calculated using the internal rate of return (XIRR) method, incorporating all upfront processing fees, verification expenses, insurance premiums, and statutory administrative charges into the total cost of credit over the loan tenure.

Data Governance and Device Permission Boundaries for DLAs

Digital Lending Apps operating in India must enforce strict privacy controls. Blanket device permissions (contacts, files, call logs) are prohibited. Loan agreements must provide a statutory look-up / cooling-off period during which borrowers can exit the loan by repaying the principal without prepayment penalty.

Frequently Asked Questions

What are the RBI Digital Lending Guidelines (DLG)?
The RBI Digital Lending Guidelines (DLG), issued under circular DOR.CRE.REC.66/21.07.001/2022-23, establish that all loan disbursements and repayments must execute directly between the bank account of the Regulated Entity (Bank/NBFC) and the borrower, without pass-through via third-party pool accounts of Lending Service Providers (LSPs). It mandates transparent disclosures, cooling-off periods, and strict privacy controls.
What is the First Loss Default Guarantee (FLDG) 5% cap?
Under the RBI circular on Default Loss Guarantee (DLG) in Digital Lending dated June 8, 2023, Regulated Entities entering into DLG arrangements with Lending Service Providers (LSPs) must ensure that the total amount of DLG cover on any outstanding portfolio does not exceed five percent (5%) of the amount of that loan portfolio.
Which forms of DLG collateral are permitted by RBI?
REs can accept DLG only in three specified forms: (1) Cash deposited with the RE, (2) Fixed Deposits maintained with a Scheduled Commercial Bank with a lien marked in favor of the RE, or (3) Bank Guarantee issued in favor of the RE.
What is the Key Fact Statement (KFS) mandate?
The Key Fact Statement (KFS) is a standardized document that must be provided to every digital borrower prior to loan agreement execution. It discloses the sanctioned loan amount, tenure, repayment frequency, itemized fee schedule, cooling-off look-up period, and the True Annual Percentage Rate (APR) representing the comprehensive annual cost of credit.
Can LSPs store biometric or location data of borrowers?
No. RBI DLG strictly prohibits digital lending apps (DLAs) from accessing mobile device media, contact lists, call logs, or storing biometric data. One-time access to camera, microphone, or location is permitted solely for KYC onboarding with explicit, purpose-bound borrower consent.