Regulating Digital Lending and Buy Now Pay Later (BNPL) in India: Consumer Protection and Systemic Risk Perspectives
Keywords:
Digital lending, Buy Now Pay Later (BNPL), consumer protection, systemic risk, regulation, Reserve Bank of India, financial innovation.Abstract
The swift growth of digital lending and Buy Now Pay Later (BNPL) platforms in India has transformed credit markets by providing rapid, technology-based credit outside of conventional banking systems. Although these advancements have improved access to credit and promoted financial inclusion, they also pose considerable challenges regarding consumer protection, regulatory supervision, and systemic risk. This paper examines the current regulatory framework that governs digital lending and BNPL in India, highlights deficiencies in consumer protection and systemic risk management, and recommends reform initiatives. Through a doctrinal legal analysis and policy assessment, the paper argues that while recent regulatory actions by the Reserve Bank of India (RBI) signify progress, there are still substantial gaps in legal classification, enforcement strategies, transparency, and systemic oversight. Insights drawn from international practices are employed to advocate for a more coherent and consumer-focused regulatory framework.
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