RBI's new DLG rules could reshape digital lending landscape
The Reserve Bank of India (RBI) just made it easier for non-banking financial companies (NBFCs) to manage risky loans.
Now, NBFCs can include default loss guarantees (DLGs)—basically, promises from their fintech partners to cover some losses—when calculating how much money they might lose on loans.
But there's a catch: the guarantee has to be part of the actual loan agreement, not just a side deal.
How this will help borrowers
Every time an NBFC uses a DLG, they'll need to recalculate their risk since the guarantee shrinks with each use.
The RBI is also keeping things tight: only DLGs from regulated fintech partners count, so no shortcuts with unregulated digital lenders.
For younger borrowers or startups who might seem "risky" on paper, this move could mean more chances at getting loans—since fintech partners are willing to back them up for up to 5% of losses.
Plus, these rules will apply across all co-lending deals too, making things fairer and clearer in digital lending.