Author name: CBCL

[By Atish Biswas] The author is a student of The West Bengal National University of Juridical Sciences. Introduction Digital lending, through websites and applications, has transformed the way individuals borrow money by integrating technical innovation with traditional banking services. This has resulted in easy and simple borrowing, quicker loan disbursement with fewer paperwork, and increased credit availability for a wider range of individuals. However, several concerns were raised regarding the business operations and conduct of these platforms, data privacy breaches, and misuse of data collected. To investigate these issues, the Reserve Bank of India (“RBI”) had set up a Working Group in 2021. Pursuant to the RBI’s Working Group’s Recommendations on Digital Lending[1], the RBI released Guidelines on Digital Lending in September 2022. The Digital Lending Guidelines, along with the Default Loss Guarantee Guidelines and other Circulars, formed the existing Digital Lending Framework in India. On 8 May 2025, the RBI released the Digital Lending Directions, 2025 (“2025 Directions”), consolidating, streamlining, and updating the regulatory framework that governs digital lending.[2] This article analyses the new Digital Lending Directions and suggests some future reforms. Key Changes The Reserve Bank of India’s 2025 Directions on Digital Lending broaden the regulatory scope and tighten compliance to enhance customer protection, data privacy, and institutional accountability. The definition of “Digital Lending” remains unchanged, referring to “remote and automated lending process, largely by use of seamless digital technologies for customer acquisition, credit assessment, loan approval, disbursement, recovery, and associated customer service”. However, its applicability has been expanded. In addition to commercial banks, co-operative banks, and NBFCs, All-India Financial Institutions are now covered under the framework. Furthermore, Digital Lending Apps (DLAs) now include any web or mobile app offering digital lending services, either standalone or as part of a larger suite. The definition of Lending Service Providers (LSPs) has been expanded to include not just agents of Regulated Entities (REs) but also those acting as LSPs for other REs, provided they are involved in the digital lending process. The 2025 Directions impose additional compliance obligations on REs. REs must enter into written contracts with LSPs, clearly defining their roles, rights, and responsibilities. REs have to periodically review the conduct of LSPs and enforce accountability. If LSPs serve multiple lenders, REs must ensure neutrality and transparency in loan offers. Creditworthiness assessments must, at a minimum, consider the borrower’s age, occupation, and income. REs have been allowed to process data outside India is now permitted, but processed data must be repatriated and deleted from foreign servers within 24 hours. The 2025 Directions lay down various measures to protect borrowers. REs are required to publicly display key details on digital products, grievance redress mechanisms, and privacy policies, along with links to the RBI’s CMS and Sachet Portal. All DLAs must be reported on the RBI’s Centralised Information Management System (CIMS). Any increase in credit limit must be explicitly requested by the borrower and recorded. Lending apps are barred from accessing sensitive mobile data, and LSPs may only retain borrower data as long as necessary. Camera and microphone use is restricted to onboarding with borrower consent. Borrowers can exit loans without penalty within a board-determined “cooling-off” period (minimum one day). Increased Scrutiny: A Positive for the Digital Lending Sector? The 2025 Directions brings digital lending participants under the ambit of a risk-based framework, balancing innovation with consumer safeguards. It consolidates fragmented guidelines into a unified framework and removes ambiguities in earlier definitions. The change in definition of LSP clearly lays down who is covered under the new Directions. By explicitly mentioning that only agents involved in the Digital Lending process are to be covered under the Directions, it clarifies that the Directions are not applicable to agents involved in non-digital loans, who would be covered under the RBI’s Directions on Outsourcing of Financial Services. Expanded definitions bring previously unregulated fintech intermediaries under scrutiny. The 2025 Directions is a positive step towards ensuring transparency and accountability in the Digital Lending Sector in India. It reduces the possibility of misrepresentation or deception in loan offers and enables productive cooperation between REs and LSPs while protecting borrowers’ interests. Furthermore, the Directions align data collection, processing, and storage with the DPDP Act. However, the success of these Directions will depend on monitoring by the RBI and implementation of the Directions. One of the most significant changes brought about by the Direction is the creation of the CIMS Portal, a public repository of authorised DLAs. The proliferation of unauthorised DLAs has posed a significant challenge to regulators and the industry. With new digital lending apps appearing frequently, it is challenging for consumers to distinguish between legitimate and dubious platforms. The rise of unauthorised DLAs erodes consumer confidence in Digital Lending. To counter this problem, the RBI Working Group had proposed a ‘Whitelisting Framework’. It recommended setting up an independent nodal agency named Digital India Trust Agency, which would verify DLAs and maintain a public repository of authorised DLAs. The RBI has adopted a modified version of this framework, with the RBI being the nodal agency. The public repository will serve as a reference point for individuals seeking loans, allowing them to confirm whether a digital lending app is officially recognised and regulated. The New Digital Lending Framework: A Missed Opportunity? Despite the positives, the new Digital Lending Framework misses certain issues. Borrowers have been left unprotected against potential data breaches and the pitfalls of automated decision making. Furthermore, there are no changes concerning regulations relating to Short-Term Credit Products. Baseline Cybersecurity Standards to Prevent Data Breaches The RBI Working Group recommended the formulation of baseline digital hygiene guidelines and technology and cybersecurity standards for LSPs and DLAs. Uniform technical/cybersecurity standards and baseline digital health guidelines are necessary for safeguarding sensitive borrower data. With digital lending apps handling large volumes of personal and financial information, the use of outdated security and technical measures can increase the risk of data breaches and misuse of customer information.[3] Algorithmic Fairness DLAs are relying increasingly on automated decision-making (“ADM”) for

Abnormally Low Bids (ALBs) challenge India’s public procurement by risking fairness, quality, and sustainability. The General Financial Rules 2017 lack specific ALB provisions, leading to inconsistent practices. ALBs may signal collusion or predatory pricing, violating constitutional fairness under Article 14. This article proposes a unified Public Procurement Act to standardize ALB handling, ensuring transparency, constitutional compliance, and value-for-money, drawing from global best practices.

[By Akanksha Sharan] The author is a student of Hidayatullah National Law University.   Introduction On May 6 2025, the Competition Commission of India (“CCI”) notified the CCI (Determination of Cost of Production) Regulations 2025 (“2025 Regulations”), came into effect the same day and replaced the 2009 regulations. Since the current competition law regime does not address challenges such as predatory pricing and strong digital platforms, the revision is needed now more than ever. The 2025 Regulations move away from assessing costs in each sector and introduce a common framework that addresses the needs of India’s developing and digital economy, following international standards. The main focus of the new framework is the use of efficient and economical cost measures. The introduction of Average Total Cost (“ATC”) and Average Avoidable Cost (“AAC”) is meant to make it simpler for regulators to find below-cost prices and review the effects on the market. It is now possible to use Long Run Average Incremental Cost (“LRAIC”) for multi-product companies and digital businesses, given that fixed, variable, sunk and common costs are now included in the definition. Now, total cost also includes depreciation which lets companies estimate costs over a long period, without counting financing overheads, since these can be different for every firm. In particular, not including market value is meant to ensure that the assessment depends on a company’s own costs rather than its changing value in the market. Since large tech and conglomerate firms can impact both cost and supplies, a standard and clear way to determine prices is necessary to ensure that competition remains fair. Ensuring a proper cost analysis is important when deciding on abuse of dominance in Section 4 of the Competition Act, 2002. Through this article, the author explores the 2025 Regulations in this article by highlighting its main changes, identifying its shortcomings and proposing plausible solutions. The discussion ends by considering how this framework could impact the way competition law is enforced in India. A Structural Shift: Unpacking the Innovation in Cost Determination The 2025 Regulations, introduces a new way for the CCI to review cost in abuse of dominance matters under Section 4 of the Competition Act, 2002. The new regulations replace the 2009 framework and use a streamlined, economic approach to ensure the new rules are consistent, fair and adaptable. Four key shifts are at the heart of this new structure:- Firstly, switching to a framework that is not limited to certain sectors. The framework under the 2009 Regulations was not formally sector-specific, but it was largely used in the traditional sectors such as manufacturing, telecommunications and pharmaceuticals where cost structure were more transparent and easier to quantify. Because of the flexible rules in 2009, each industry had different views about possible dangers which resulted in inconsistent assessments. Since manufacturing and digital sectors have their own cost standards, similar pricing actions might be understood differently. The 2025 Regulations solve these problems by introducing a single method that all sectors must follow. Therefore, it promotes certainty, helps control competition avoidance and brings Indian competition enforcement in line with the rules of the European Union (“EU”) and the OECD. Secondly, the regulations officially include ATC and AAC as primary measures for tracking costs. ATC includes the total cost of each unit made which consists of fixed and variable costs. It provides a better overview of a firm’s costs and how its prices are likely to stand the test of time. Unlike average cost, AAC points out the amounts a firm could save simply by not creating additional units which is why it is useful for spotting predatory pricing. If the price is lower than AAC, it’s likely the company aims to remove competitors instead of competing on quality. Together, these metrics remove subjective and unreliable cost benchmarks and provide useful, proven tools instead. Thirdly, the new definition of LRAIC now covers sunk and common costs, in addition to the usual fixed and variable costs. The importance of this has grown lately, since many companies participate in several product or service areas. Looking at the company as a whole makes it hard for a leading firm to move losses from one area to another, as everything is visible. It also supports the detection of cross-subsidisation, a way for bigger companies to push out smaller rivals. Fourthly, when the elements of total cost are clearly identified, cost evaluation becomes more reliable and unbiased. The inclusion of depreciation allows long-term assets particularly in capital intensive sectors like infrastructure and manufacturing to be appropriately accounted for. Meanwhile, excluding financing overheads avoids the inclusion of costs like interest expenses, which vary significantly not only cross firms but also based on internal financial strategies rather than market dynamics. Additionally, by excluding the market value of assets – which tends to fluctuate and is influenced by investor sentiment – the Regulations emphasis the actual costs incurred by a company. This shift ensures that assessments are grounded in measurable, verifiable internal metrics rather than unstable external valuations. All in all, these changes bring India’s competition system up to date and allow the CCI to address changes in the digital economy with more accuracy and fairness. Flexibility or Fragility? Gaps in the New Regulatory Framework While the 2025 Regulations are a significant improvement to India’s competition rules, they still have a few issues. Moving toward a technical, cost-based analysis introduces challenges that could affect both market fairness and regularity consistency. Though the framework shows promise, its application – especially across market structures requires deeper scrutiny. One key issues is the lack of specificity regarding digital markets. Although the CCI acknowledges features like network effects, low marginal costs and scale economies, it has not issued any sector-specific guidance. While this flexibility was meant to help the system adjust, it actually leaves a gap. When there are no set limits, sample cost models or clear guidelines, regulators have a lot of power and large digital firms can organize their costs to escape review. For instance, there is