Earlier this month, the Reserve Bank of India (RBI) released its Guidelines on Default Loss Guarantee (DLG) in Digital Lending. We bring to you this special edition of the newsletter that covers the effect of the recent DLG Guidelines on the digital lending landscape in India.
Guidelines on Default Loss Guarantee (DLG) in Digital Lending (click here)
In the history of RBI committees and reports, it has always been the case that RBI implements the recommendations of its committees as is. But in a serendipitous moment, RBI has officially anointed ‘Default Loss Guarantee’ (“DLG”), more commonly known as First Loss Default Guarantee (FLDG) legal (terms and conditions apply). This is the opposite of the recommendations of the Working Group on Digital Lending – Implementation” dated August 10, 2022, which called this model ‘Rent an NBFC’ in its report and asked for its ban.
Read more in our simplified analysis of the recent RBI Guideline written for Mondaq (click here)
