As India is witnessing the rapid expansion of digital lending in its financial sector, it becomes increasingly important to redefine its regulatory framework accordingly. While the use of AI models and ML in credit risk assessment helps in improving the overall efficiency and scalability, the challenges like AI-bias, data protection, and lack of transparency call for prompt intervention. 

What seems to be most optimal for LSPs is to form partnerships with entities that are less likely to exploit and more inclined to cooperate.

This article first describes what an FLDG arrangement is and then analyzes the guidelines on the same.

Although there are a few uncertainties here and there, the fintech companies have welcomed the guidelines with full vigor.

There is need to create trust in the lending sector to normalise undertaking credit, author notes.

The authors examine the regulatory gaps that have purportedly allowed lending apps to take up exploitative practices.