The Reserve Bank of India (RBI) has reportedly directed banks to restrict themselves from sending direct selling agents (DSAs) to verify KYC documents of retail loans and credit cards.
DSAs played a significant role for banks in sourcing retail products such as credit cards, personal loans, among others. In response to the queries from the banking sector, the RBI has communicated that such practices shall be prohibited to contain the probability of data theft and operational risks.
However, with the DSAs out of the picture, banking and financial institutions might face a crisis as it would bring down the sales of retail loans and credit cards in the sector.
As DSAs contribute a significant portion to the loans and credit cards sourced, the lenders are reportedly planning on approaching the government and the apex bank for clarification.
RBI, on the other hand, believes that the KYC verification procedure is of utmost importance and is not something that can be assigned to agents. Since the process involves verifying the original KYC documents of the borrower, the central bank believes that the verification prices should be done only by the bank officials.
For any clarifications/feedback on the topic, please contact the writer at viswanathan.v@cleartax.in
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