Consent at a tap becomes a challenge for digital lending

Lenders want continuous access to and use of certain borrower data for duration of live loans

- Salman S. H.

India's new data protection regime makes a seemingly simple promise: if an app can take consent in a tap, it must allow users to withdraw it just as easily.

But in digital lending—where loans are priced, monitored and sometimes recovered using a steady stream of personal data—that promise is running into the realities of regulated credit. With their practices upended, the industry is seeking some leeway.

As the Digital Personal Data Protection (DPDP) Act nears full implementation, the industry is pushing back on a few key clauses in the Act. Two people familiar with the discussions said the Fintech Association for Consumer Empowerment (Face), a Reserve Bank of India (RBI)-recognized self-regulatory organization, has, along with some member firms, made multiple representations to the ministry of electronics and information technology (Meity) seeking an exemption under Section 17.

According to the first person cited above, the industry is seeking relief to let the lenders continue accessing and using specified borrower data for the entire duration of a live loan, even if the borrower tries to withdraw consent mid-tenure. The person is a policy expert consulting for fintech firms.

According to the person, the industry's case rests on how digital lenders manage credit risk after disbursal, especially for early-warning systems that flag repayment stress before a default happens.