Banking & Finance MCQs - 2026-10-23

Digital lenders are required to collect only necessary data from borrowers, with explicit consent for each specific purpose, and must clearly disclose how the data will be used. Accessing sensitive information like phone contacts or call logs without specific, informed consent is prohibited.

The Fair Practices Code explicitly prohibits digital lenders and their agents from resorting to any form of harassment or intimidation, including the use of abusive language, persistently calling at odd hours, or publishing borrower details, for loan recovery.

The RBI mandates that Regulated Entities (REs) are ultimately responsible for ensuring that their Lending Service Providers (LSPs) adhere to the Fair Practices Code and all other applicable guidelines, thereby ensuring accountability in the digital lending ecosystem.

The 'cooling-off period' allows borrowers a specified time to reconsider the loan terms and exit the loan by repaying the principal along with proportionate Annual Percentage Rate (APR) without any penalty, thereby protecting consumer interests.

To enhance transparency and prevent unauthorized deductions, RBI mandates that loan disbursal and repayment must be executed directly between the borrower's bank account and the Regulated Entity's (RE) bank account, without any pass-through accounts of Lending Service Providers (LSPs).

The Key Fact Statement (KFS) is a mandatory document introduced by the RBI to provide borrowers with a clear and concise summary of all essential loan terms, including the Annual Percentage Rate (APR), tenure, and charges, thereby enhancing transparency in digital lending.