Cashfree Payments Unveils New Tool for Digital Lending

India’s Cashfree Payments has debuted a new tool it says is designed to help non-banking financial companies meet the country’s new digital lending rules.

According to a news release emailed to PYMNTS Thursday (Oct. 27), the company’s disbursement and collections solution can create lender escrows, manage partnerships with lending service providers and handle things like borrower identity and bank account verification.

The tool is in response to new guidelines issued by the Reserve Bank of India (RBI) in August that create oversight for digital lending apps and the lenders who work with them.

Under the new rules, only regulated financial institutions (FIs) — and not third parties — will be able to issue and collect loan repayments.

“All loan disbursals and repayments are required to be executed only between the bank accounts of [the] borrower and the regulated entity without any passthrough/pool account of the lending service providers or any third party,” the RBI said in its announcement.

The new rules also say that fees paid to apps will now be covered by the lender, with no burden placed on borrowers.

Watch: Fireside Chat with Akash Sinha, Co-Founder and CEO at Cashfree Payments

Akash Sinha, co-founder and CEO of Cashfree Payments, said in the news release that India’s digital lending sector has grown rapidly along with the country’s FinTech segment.

“With the exponential growth, there is a strong need to enable compliant and scalable solutions for loan disbursals, loan repayment, and KYC [know your customer] verification among other things,” Sinha said.

Earlier this month, Sinha wrote in the PYMNTS eBook “What’s Your Plan? Payments Strategies for a Strong 2022 Finish” that the country’s digital payments industry was has reached a turning point.

“As we enter the last quarter of this year, we are seeing an increasing number of businesses trying to go digital to acquire more customers,” he said.

“This is great news for payment companies like us. We have grown almost 100% in terms of merchant sign-ups in the last four months. We see tremendous scope in the Indian trading operation where traders are buying stocks, listed outside India.”