In times of financial crisis, it is loans that give you the much needed respite and help you sail out of bad times.
Fintech lenders provide convenient credit access to a diverse set of consumers, including new to credit customers and other underserved sections. However amidst financial crunch and desperate times, borrowers need to be mindful towards identifying the legitimacy of lenders.
They can refer to information touch points like website, company policies, code of conduct, feedback and complaint handling mechanisms on digital assets to assess lenders’ genuineness. Following are the major factors which one must look into before borrowing from loan apps so that they can determine and identify genuine fintech lenders.
Responsible lenders are transparent when it comes to dissipation of necessary information pertaining to credit parameters like interest rate and tenure, as well as the processes involved in credit access. A borrower should heed to digital lender’s compliance with RBI guidelines, including the legitimacy of NBFC that is backing it. Further, attention to be paid if the lender has disclosed all the charges explicitly to the user in the app flow, and also categorically communicated to users in the sanction letter with a proper break-up.
Adherence to the Google Play Store norms
As per Google’s policy terms, the financial services provider apps should comply with state and local regulations for the region or country of operations. Further, any app, listed as a Fintech Lending Platform, should not have a minimum repayment tenure of less than 61 days.
Personal data access
Some lending apps request gallery and contact access for underwriting and authenticity evaluation. However responsible lenders respect the confidential nature of this data, and strictly avoid sharing it with third parties including tele-calling recovery agents. In present circumstances, lenders have become highly capable in terms of underwriting system and follow vetted collection processes. This eliminated their dependency on contact lists or the gallery access, thus eliminating any scope for egregious practices. Also, towards responsible digital lenders ensure watertight data security framework by suitably monitoring over AI functionality and performing frequent Information Security Audits.
Fair collection techniques
Digital lenders have become highly consumer centric towards imparting convenient borrowing experience and eliminating the borrower stress. This is also reflected in their collection strategies. Responsible lenders ensure that the recovery agents act under the purview of the Fair Practices Code and hence facilitate regular training. Through legal counsel, legitimate lenders meticulously work towards vetting the communication scripts required in Telecalling, SMS and OBD. Further their entire voice-based communication is recorded and audited by an internal Quality Analysis team. Responsible digital lenders ensure to limit the agents’ access to borrowers’ details to loan parameters (the EMI Due Date) only.
(Expert comments by Madhusudan Ekambaram, Co-Founder & CEO, KreditBee and Co-Founder, FACE (Fintech Association for Consumer Empowerment)