Key Points
The Reserve Bank of India today proposed to wide the scope of the framework for resolution of stressed assets across all regulated entities and said it will also permit default loss guarantee arrangements in digital lending...
The Prudential Framework for Resolution of Stressed Assets, which was first announced by the central bank in June 2019 amid the first wave of the pandemic for banks, financial institutions and non-banking finance companies, will going ahead also be applicable for all regulated entities including co-operative banks...
"Further, it is also proposed to rationalise the extant prudential norms on restructuring of borrower accounts affected by natural calamities," RBI Governor Shaktikanta Das said...
The central bank today also said it has decided to put in place a regulatory framework for permitting default loss guarantee arrangements in digital lending with the objective of maintaining a balance between innovation and prudent risk management...
The so-called First loss default guarantee (FLDG) is a lending model among fintech firms and their partner banks and NBFCs where the initial hit on a default is taken by the fintech firm that originated the loan...
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