Consumer Protection Under RBI's Digital Lending Directions, 2025: A Critical Legal Analysis
- IJLLR Journal
- Jul 23
- 1 min read
Shereen MI, JSS Law College, Mysuru
Priya A Jagadish, JSS Law College, Mysuru
ABSTRACT
The rapid expansion of digital lending in India has transformed credit delivery by enabling quick, convenient, and technology-driven access to finance through digital lending applications, fintech platforms, and online service providers. While this growth has improved financial inclusion and expanded access to formal credit, it has also raised significant consumer protection concerns, including hidden charges, inadequate disclosure, misuse of personal data, coercive recovery practices, unauthorized lending applications, and weak grievance redressal mechanisms. These developments have intensified scrutiny of the adequacy of India’s regulatory framework in safeguarding borrower interests. This paper critically examines the consumer protection architecture under the Reserve Bank of India’s Digital Lending Directions, 2025, with particular emphasis on transparency, Key Fact Statements, data privacy, informed consent, direct fund flow, fair recovery practices, and grievance redressal. It also analyses the RBI’s regulatory role in ensuring accountability of regulated entities and Lending Service Providers in the digital lending ecosystem. The paper concludes by offering reform-oriented recommendations aimed at strengthening borrower protection, improving regulatory compliance, and promoting a transparent, fair, and consumer-centric digital lending framework in India.
Keywords: FinTech Regulation, Digital Lending Applications, Lending Service Providers, Consumer Protection, RBI Digital Lending Directions, 2025, Data Privacy, and Financial Regulation.
