Impact and Expectations of FLDG Guidelines in India

CA.Rajeev Joshi (CA,CISA,DISA) | Last updated: 22 July 2023

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The Reserve Bank of India (RBI) has introduced First Loss Default Guarantee (FLDG) guidelines to regulate partnerships between fintech firms and financial institutions. These guidelines aim to promote responsible lending by making fintechs accountable for initial defaults, fostering transparency, and encouraging foreign investment. However, they also introduce challenges such as increased Non-Performing Assets (NPAs) for banks and potential reductions in business volumes due to new restrictions on partnership models.

Introduction The First Loss Default Guarantee (FLDG) has become a critical lending model within the fintech industry, revolutionizing partnerships between fintech firms and banks/non-banking finance companies. This innovative framework holds the originating fintech firm responsible for the initia

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CA.Rajeev Joshi (CA,CISA,DISA)

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Strategic, analytical Finance Professional with nearly 2 decades comprehensive experience with impressive success in heading Finance Function of Indian subsidiaries of Nasdaq Listed, Fortune 500 MNCs. Strong experience across all aspects of Finance including financial planning modeling, multi-locational multi-cur ... Read more

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