finpeel Answers · India · updated 2026-08-14
A Lending Service Provider (LSP) is an agent of a regulated entity that carries out one or more functions in the digital lending process on behalf of that regulated lender. The LSP is not automatically the lender merely because it operates the customer-facing app.
Functions can include customer acquisition, underwriting support, servicing, monitoring or recovery, subject to the RBI framework and the regulated entity’s oversight.
The legal allocation matters because borrower funds and regulated lending responsibility generally remain tied to the regulated entity, not the LSP.
Regulator: Reserve Bank of India (RBI)
Primary sources: RBI — Digital Lending Guidelines / FAQs · RBI — Digital Lending Directions, 2025
Directional — not legal advice. Verify with the regulator before committing.
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