About Lending Service Providers (LSPs):
- They are engaged by the Regulated Entities (REs) (banks or NBFCs) to carry out some functions of RE in connection with lenders’ functions on digital platforms. They offer their services to REs for a fee or commission.
- RBI defines an LSP as an agent of an RE that carries out one or more functions of the lender, includingcustomer acquisition, underwriting support, pricing support, disbursement, servicing, monitoring, collection, and loan recovery on behalf of the RE.
- In simple terms, LSPs are loan aggregatorswhich provide loans from their partner REs. In some cases, a RE can also act as an LSP.
- They are technology-centric entities which have the client reach and are thus capable of offering a marketplace for both lenders and borrowers.
- LSPs entail aggregation of loan offers from multiple lenders on an electronic platform, which enables the borrowers to compare and choose the best available option to avail a loan from one of the available lenders.
