FACEs Debt Collection Norms: New Benchmark for Fintechs and NBFCs

Source: BS

Context:

The Fintech Association for Consumer Empowerment (FACE) has rolled out self-regulatory norms on debt collection, aligning with RBI’s digital lending guidelines. These norms aim to bring discipline, transparency, and borrower protection into the lending ecosystem.

Key Highlights:

• Fintech: Fintech (short for Financial Technology) refers to the use of digital technologies, such as software, apps, and algorithms, to provide and automate financial services and products, making them more accessible, efficient, and less costly.
• Governance & Conduct: Norms cover governance, agent behaviour, borrower disclosures, data protection, and digital/field recovery safeguards.
• Objective: Create a robust, respectful, and responsible debt collection process, ensuring fair treatment of borrowers.
• Symbiotic Link: FACE stresses that strong debt collection improves lenders’ confidence, reduces delinquencies, and expands access to credit.
• Industry Impact: Debt recovery discipline could reshape business models, especially for unsecured lending.
• Benchmark Effect: Experts believe FACE’s framework will serve as a template for other SROs (NBFCs, microfinance, BCs).

Fintech Association for Consumer Empowerment (FACE)

• Name: Fintech Association for Consumer Empowerment (FACE)
• Type: Non-profit Section 8 company
• Founded: September 2020
• Location: Mumbai, Maharashtra

Recognition & Role

• SRO-FT Status: FACE is recognised by the Reserve Bank of India (RBI) as the Self-Regulatory Organisation for the FinTech sector (SRO-FT).
• A self-regulatory organization (SRO) is a non-governmental body that creates and enforces industry-specific rules, standards, and ethical guidelines for its members, often under the oversight of a government regulator.
• It was the only association approved under RBI’s fintech SRO framework as of August 2024.
• Mission & Vision:
  1. Promote responsible, consumer-centric fintech services that are safe, transparent, and suitable.
  2. Build a nurturing fintech ecosystem where innovation and consumer protection go hand in hand.