Is your data safe when applying for personal loans online? What you must know
The rise of digital lending platforms has made applying for personal loans convenient across the country. Still, major concerns about data protection, borrower privacy, and security have gained traction over the years. This has happened as borrowers share critical personal information online.
The Reserve Bank of India (RBI) has stepped up oversight in this space along with other government organisations. This has been achieved by framing guidelines consistently to ensure responsible lending and protection of borrower rights from exploitation.
Priyanka Kanwar, Co-founder & CEO of Falcon, says, “Digital lending’s growth makes the RBI and MeitY’s focus on consumer protection timely and forward-looking, and their privacy-by-design approach lays the foundation for long-term digital safety while urging the industry to build transparent, trust-first systems to strengthen consumer confidence.”
Rapid growth in technology, along with the comfort of one-click loan approval, has drawn millions of borrowers to fintech platforms in recent years. However, with speed comes the potential of financial losses and risks. Especially when crucial personal information such as PAN details, Aadhaar details, bank statements, along with income proofs, is the subject of discussion.
In such cases, improper verification, weak encryption, and unclear data-sharing practices can leave borrowers vulnerable and exposed to identity theft and financial fraud. Therefore, to address these risks, regulators have nudged lenders towards more comprehensive and elaborate disclosures. The focus is now shifting towards consent-based data usage.
Borrowers, on their part, are increasingly advised to review an application’s privacy policy, credibility, checking whether it is linked to a regulated bank or NBFC, and avoiding granting blanket permissions for contact lists, photos, other personal information, or location tracking, none of which are mandatory for the approval of a legitimate personal loan application.
Hence, as digital lending deepens its roots in the nation with new borrowers entering the fold, the industry’s creditworthiness and accountability will depend on how well it can secure consumer faith. While regulations provide directions, the onus also lies on borrowers to stay vigilant and safeguard their rights by treating their personal data as seriously as their bank balance.
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