New FAQ Page 2 - आरबीआय - Reserve Bank of India
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FAQs on Guidelines on Default Loss Guarantee in Digital Lending
Ans: RE providing DLG shall deduct full amount of the DLG which is outstanding from its capital.
Ans: DLG arrangements are not permitted on the loans which are covered by the credit guarantee schemes administered by trust funds as specified under para 2 of Review of Prudential Norms – Risk Weights for Exposures guaranteed by Credit Guarantee Schemes (CGS) dated September 07, 2022, as amended from time to time.
Note: Illustrations are provided for ease of understanding and are merely indicative and not exhaustive.
Illustration 1
Assume that as on April 1, 2024 the RE earmarks a portfolio of ₹40 crore (out of the total sanctioned loans) under a DLG arrangement (DLG set). This portfolio shall remain "frozen" for the purpose of the specific DLG arrangement - meaning that no loan assets can be added or removed from it, except through loan repayment/ write-off. The RE can have such multiple DLG sets.
The ceiling for DLG cover on such portfolio shall be fixed at ₹2 crore (5% of ₹40 crore), which shall get activated proportionately as and when the loans are disbursed.
Illustration 2
Assume that out of the above DLG set, loans amounting to ₹10 crore are disbursed immediately. Then as on April 1, 2024, the DLG cover available for the portfolio shall be ₹0.5 crore (5% of disbursed).
Subsequently, if loans of ₹10 crore are further disbursed on April 15, 2024, the DLG cover shall proportionately increase to ₹1 crore effective April 15, 2024.
(Refer table below also for summary of each case)
Case 1: As on June 30, 2024, loans worth ₹5 crore mature without any default. In this case, the outstanding portfolio in the books of the RE would be ₹15 crore and the DLG cover shall remain at ₹1 crore.
Case 2: Subsequently, there is a default of ₹2 crore during Q2-2024 and consequently the RE invokes the entire DLG (₹1 crore 1). In this case, as of Sept 30, 2024 the outstanding portfolio in the books of the RE shall be ₹15 crore (₹20 crore original portfolio less ₹5 crore loans matured without default) but no headroom for DLG will be available as the maximum permissible DLG cover of ₹1 crore (5% of disbursed) has been exhausted.
Case 3: Going further, let’s assume that recovery worth ₹1 crore is made by the RE during October 2024 on the defaulted loans of ₹2 crore. In such a case, the amount of the outstanding portfolio in the books of the RE as on October 31, 2024 shall come down to ₹14 crore (₹20 crore original portfolio less ₹5 crore loans matured without any default less ₹1 crore loans which were in default and recovered). However, the recovery amount of ₹1 crore cannot be added to reinstate the DLG cover.
(figures in ₹ crore)
| Period | Disbursed |
Loan maturing without default |
Default Amount |
DLG Invoked |
Recovery/ Write-off |
Outstanding Portfolio |
Available DLG Cover |
| Initial Position |
10 |
- |
- |
- |
- |
10 |
0.5 |
| Further disbursement |
10 |
- |
- |
- |
- |
20 |
1 |
| Case 1 |
20 |
5 |
- |
- |
- |
15 |
1 |
| Case 2 |
20 |
5 |
2 |
1 |
- |
15 |
0 |
| Case 3 |
20 |
5 |
2 |
1 |
1 |
14 |
0 |
1 It has been assumed that till date zero principal/interest have been received towards these loans.
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