What Are RBI Guidelines On BNPL (Buy Now Pay Later)?

Buy Now Pay Later (BNPL) is a rapidly growing digital credit facility that allows consumers to purchase goods and services and pay for them at a later date in installments or lump sum. Recognizing its popularity and risks, the Reserve Bank of India (RBI) has issued guidelines to regulate BNPL providers, ensuring responsible lending, consumer protection, and transparency in credit terms.

Key RBI Guidelines on BNPL

Classification as Credit Facility

BNPL services are treated as credit under RBI regulations, requiring compliance with digital lending and consumer credit norms.

Mandatory Disclosure

Providers must disclose all terms and conditions clearly, including interest rates, late fees, repayment schedules, and total payable amount.

Consumer Consent and Credit Assessment

BNPL providers must obtain explicit consumer consent and conduct appropriate creditworthiness assessments before extending credit.

Fair Practices and Transparency

Strict adherence to fair lending practices, prohibition of hidden charges, and transparent communication are mandated.

Grievance Redressal Mechanism

Providers must establish robust complaint resolution systems accessible to consumers.

Data Privacy and Security

BNPL firms must comply with data protection laws and ensure secure handling of customer information.

Impact on Consumers and Providers

Enhances consumer awareness of credit obligations.

Reduces the risk of over-indebtedness through credit assessments.

Builds trust in BNPL services through transparency and accountability.

Consumer Tips

Read all terms carefully before opting for BNPL.

Track repayment dates and avoid late payments to prevent penalties.

Use BNPL services from RBI-registered or regulated entities.

Report any unfair practices or disputes promptly.

Example

A customer uses a BNPL option to purchase electronics worth ₹30,000 from an online store. The BNPL provider shares a detailed repayment plan with interest and fees disclosed upfront.

Steps the customer should follow:

Review all terms and agree only if comfortable with repayment conditions.

Complete the required KYC and credit checks.

Make timely payments as per schedule to avoid penalties.

Contact the provider’s grievance cell if any issue arises.

Monitor account statements regularly for accuracy.