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Overview & Implementation Approach

1. PURPOSE

India has rapidly emerged as a digital-first economy, where technology is transforming industries, improving financial inclusion, and accelerating economic growth. While digital innovation offers significant opportunities, it also presents challenges, including the risk of unethical practices that may exploit regulatory gaps.

With the rapid expansion of the digital lending ecosystem, it is essential for industry participants to uphold the highest standards of integrity, transparency, and responsible lending. Adhering to a robust Code of Conduct helps safeguard customer interests, strengthen trust among regulators and stakeholders, and promote sustainable industry growth.

This Code of Conduct establishes a common framework of ethical principles and operational standards to ensure fair, transparent, and responsible digital lending practices. It is designed to protect customers, mitigate risks unique to digital lending, and foster confidence in the digital financial ecosystem.

2. APPLICABILITY

This Code of Conduct is designed to complement, and not replace, all applicable laws, regulations, guidelines, and directives governing lending businesses in India, including those issued by the

  • Reserve Bank of India (RBI) from time to time. Nothing in this Code shall be interpreted as overriding or superseding any applicable legal or regulatory requirement. In the event of any conflict or inconsistency between this Code and any prevailing law or regulation, the applicable law or regulation shall take precedence.

 

  • This Code of Conduct applies to all Members in every aspect of their dealings, interactions, communications, and transactions with any individual, entity, or business (collectively referred to as the “Customer”) to whom a financial product or service is offered or provided through digital or online technology platforms.

 

  • All Members are expected to comply with the provisions of this Code of Conduct and uphold the highest standards of ethical and responsible business practices. Failure to comply with the requirements of this Code may result in appropriate sanctions or disciplinary actions, as outlined in Section 4 of this document.

3. MEMBER COMPLIANCE & COMMITMENT

All Members shall provide a written undertaking, both at the time of admission and upon each renewal of membership, confirming their commitment to comply with this Code of Conduct. Existing Members shall also submit a written confirmation of their acceptance of the Code as a prerequisite for the continuation of their membership.

By accepting this Code of Conduct, each Member shall be deemed to have acknowledged and consented to the Digital Lenders Association of India (DLAI) exercising its authority to enforce the sanctions and disciplinary measures specified in Section 4 of this Code.

Each Member shall appoint a Designated Compliance Officer (DCO) and notify DLAI in writing of the appointed individual’s name and contact details. The Designated Compliance Officer shall be responsible for:

  • Monitoring and reporting the Member’s compliance with this Code of Conduct.
  • Acting as the primary point of contact for all communications with DLAI concerning the Code of Conduct.
  • Ensuring the timely dissemination of the Code of Conduct, including any amendments or updates, across the Member’s organization.
  • Promoting awareness and adherence to the Code among employees, agents, and authorized representatives.

To maintain active membership and participation in DLAI activities, each Member shall submit an Annual Compliance Declaration to the Management Committee in the prescribed format. This declaration shall include a certification by a Director, Company Secretary, or other Key Managerial Personnel confirming that the Member has complied with the provisions of this Code of Conduct during the reporting period.

Members are further encouraged to establish structured and periodic training programs to educate employees, agents, and representatives on the requirements of this Code of Conduct, any subsequent amendments, and the consequences of non-compliance. Such initiatives should foster a strong culture of ethics, regulatory compliance, and responsible digital lending practices throughout the organization.

4. MONITORING, SANCTIONS & ENFORCEMENT

The Management Committee shall be responsible for monitoring Members’ compliance with this Code of Conduct. To facilitate effective oversight, the Management Committee may constitute a Monitoring Committee or any other designated body. In such cases, all references to the Management Committee in this section shall be deemed to refer to the Monitoring Committee or the designated authority, as applicable.

The Management Committee shall establish and publish a fair, transparent, and objective procedure for:

  • Receiving and registering complaints relating to alleged violations of this Code of Conduct by any Member;
  • Investigating complaints and determining whether a breach of the Code has occurred;
  • Providing the concerned Member with a reasonable opportunity to present its explanation or representations; and
  • Determining and imposing appropriate sanctions in cases of confirmed non-compliance.

The decision of the Management Committee regarding any violation of this Code of Conduct shall be final and binding on the concerned Member and shall not be subject to appeal.

Where a Member is found to be in breach of this Code of Conduct, the Management Committee shall have the authority to impose one or more of the following disciplinary actions (collectively referred to as “Sanctions”) as deemed appropriate under the circumstances:

a. Cancellation of Membership
Terminate the Member’s membership with the Digital Lenders Association of India (DLAI).

b. Suspension or Debarment
Debar the non-compliant Member from obtaining future membership and/or participating in DLAI’s events, initiatives, committees, or services for such period as the Management Committee may determine.

c. Notification to Members and Public Disclosure
Inform all DLAI Members of the cancellation or suspension of the Member’s membership and, where considered appropriate, publish details of such action on DLAI’s official website or other designated communication channels.

d. Reporting to Regulatory Authorities
Report any serious or material violation of this Code of Conduct to the appropriate regulatory or statutory authorities, including the Reserve Bank of India (RBI), where required or considered necessary.

e. Corrective and Remedial Directions
Issue such additional directions or corrective measures as the Management Committee considers appropriate to ensure compliance with this Code of Conduct. This may include requiring the Member to provide a formal undertaking and implement specified remedial actions within a prescribed timeframe to address the identified non-compliance.

5. PROMOTION OF THE CODE OF CONDUCT

Members are encouraged to actively promote awareness of this Code of Conduct and support its effective implementation, monitoring, and continuous improvement across their organizations.

To reinforce transparency and fair lending practices, each Member shall incorporate this Code of Conduct into its Fair Practices Code, in line with the standards generally followed by banks and Non-Banking Financial Companies (NBFCs). The Code shall also be made readily accessible to customers through the Member’s official website, mobile application, or other digital platforms, as applicable.

Members, customers, and other interested stakeholders may contact the Digital Lenders Association of India (DLAI) regarding the implementation, interpretation, or compliance with this Code of Conduct through the following contact details:

Email: info@finlixcapitalin.com

PRINCIPLES OF THE CODE OF CONDUCT

1. COMPLIANCE WITH APPLICABLE LAWS & REGULATIONS

Every Member shall conduct its business in full compliance with all applicable laws, regulations, guidelines, circulars, and directives governing its operations. This includes, but is not limited to:

  • Financial services, lending, and consumer protection laws, including all applicable directions, circulars, notifications, and guidelines issued by the Reserve Bank of India (RBI) and other competent regulatory, statutory, or governmental authorities.

  • Laws governing information technology, digital communications, cybersecurity, privacy, and protection of personal data in electronic systems.

  • Any other applicable legal or regulatory requirements relating to the Member’s business operations, governance, and lending practices.

The obligations contained in this Code of Conduct are supplementary to, and do not replace, the Member’s legal and regulatory responsibilities. Each Member shall remain solely responsible for ensuring full compliance with all applicable laws and this Code of Conduct.

2. GUIDING PRINCIPLES

2.1 Transparency in Products, Pricing & Services

Members shall ensure that all financial products and services are presented in a clear, accurate, and transparent manner.

Accordingly, every Member shall:

  • Maintain a Board-approved Fair Practices Code in accordance with RBI guidelines.

  • Ensure that employees, agents, representatives, and service providers comply with the Fair Practices Code.

  • Treat every customer with dignity, respect, and professionalism.

  • Strictly prohibit harassment, intimidation, coercion, or unfair treatment during servicing or collections.

  • Provide regular training to employees and agents on ethical conduct and customer service standards.

 

2.2 Fair Treatment of Customers

Members shall maintain the highest standards of fairness and professionalism in all customer interactions.

Accordingly, every Member shall:

  • Maintain a Board-approved Fair Practices Code in accordance with RBI guidelines.

  • Ensure that employees, agents, representatives, and service providers comply with the Fair Practices Code.

  • Treat every customer with dignity, respect, and professionalism.

  • Strictly prohibit harassment, intimidation, coercion, or unfair treatment during servicing or collections.

  • Provide regular training to employees and agents on ethical conduct and customer service standards.

2.3 Responsible Lending & Affordability

Members shall lend responsibly by ensuring that customers have the financial capacity to meet their repayment obligations.

Members shall:

  • Conduct fair and appropriate income and affordability assessments.

  • Evaluate the customer’s repayment capacity before extending credit.

  • Avoid extending loans or financial products beyond the customer’s reasonable repayment ability.

3. OPERATIONAL STANDARDS

3.1 Product Transparency

Disclosure of Terms and Conditions

Members shall provide customers with complete, accurate, and timely information regarding every financial product.

This includes:

  • Loan agreements clearly outlining the rights and obligations of both parties.
  • Product features, repayment obligations, tenure, applicable charges, and contractual terms.
  • Clear disclosure that the loan will be reported to Credit Information Companies (Credit Bureaus).
  • Explanation of the consequences of delayed payment or default, including legal and credit implications.
  • Identification of the regulated lender and, where applicable, the Member’s role in facilitating the loan.

Disclosure of Costs

Members shall clearly disclose every applicable charge associated with the financial product, including:

  • Processing fees
  • Interest charges
  • Insurance premiums
  • Registration charges
  • Documentation fees
  • Late payment charges
  • Prepayment or foreclosure charges
  • Penal charges
  • Any additional fees

Illustrative repayment examples shall be provided in Indian Rupees (INR) to help customers understand the total borrowing cost.

A detailed repayment schedule, including installment amounts and due dates, shall also be provided.

3.2 Pricing & Cost of Credit

Responsible Pricing

Members shall adopt fair and transparent pricing practices and shall not engage in predatory, exploitative, or misleading pricing structures.

Pricing models shall not:

  • Conceal actual borrowing costs.
  • Misrepresent applicable fees or charges.
  • Use unnecessarily complex pricing designed to confuse customers.

Interest Rate Disclosure

Members shall disclose the effective annual interest rate (Annual Percentage Rate, where applicable), together with:

  • Loan amount
  • Loan tenure
  • Total borrowing cost

This disclosure shall enable customers to understand the true cost of credit.

Late Payment Charges

Late payment charges shall:

  • Be disclosed before loan disbursement.
  • Be reasonable and transparent.
  • Not result in unfair compounding of penalties.
  • Comply with the Member’s approved internal policies and applicable regulatory requirements.

Credit Assessment 

Members shall establish appropriate systems for:

  • Customer identity verification
  • Income verification
  • Financial assessment
  • Creditworthiness evaluation
  • Validation of customer information

These processes shall ensure responsible lending decisions.

3.3 Collection & Customer Servicing

Loan Information

Members shall provide customers with timely and accurate information regarding:

  • Outstanding loan balances
  • Upcoming repayment dates
  • Payment confirmations
  • Loan statements

Ethical Collection Practices

Collection activities shall always be conducted professionally and respectfully.

Members shall ensure that employees, collection agents, and representatives:

  • Do not harass or intimidate customers.
  • Do not contact family members or unrelated third parties except where legally permitted.
  • Avoid abusive, threatening, humiliating, or coercive behaviour.
  • Receive appropriate training on ethical recovery practices.

3.4 Data Privacy & Information Security

Members shall adopt a consent-based framework for collecting, processing, storing, and sharing customer data.

Members shall:

  • Obtain informed customer consent before collecting personal information.
  • Clearly explain the purpose for which customer data is being collected.
  • Maintain secure records of customer consent.
  • Protect customer information through appropriate security measures.
  • Use customer data only for authorized and disclosed purposes.

Members shall not:

  • Collect unnecessary personal information.
  • Collect data without customer consent.
  • Use customer data for undisclosed purposes.
  • Sell customer information without explicit authorization.
  • Share customer information with unauthorized third parties.
  • Access or use customer contact lists for loan recovery purposes.
  • Use customer information in any manner that may cause harm, harassment, or intimidation.

4. CUSTOMER GRIEVANCE REDRESSAL

Every Member shall establish an effective, transparent, and customer-centric grievance redressal mechanism.

Members shall:

  • Maintain a Board-approved Customer Grievance Redressal Policy.
  • Ensure timely, fair, and efficient resolution of customer complaints.
  • Publish customer service and grievance redressal contact details on their website and digital platforms.
  • Provide contact details of the regulated lending institution (where applicable).
  • Inform customers about their rights to approach external grievance redressal authorities, including the Reserve Bank of India (RBI), the RBI Integrated Ombudsman, consumer dispute redressal forums, and other competent authorities, together with guidance on the complaint escalation process.

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