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What is an LSP (lending service provider) in loan apps?

An LSP is a company or app that works for a bank or NBFC to find borrowers and run the loan process. It isn't the lender. See how to tell them apart.

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What LSP means

LSP stands for lending service provider. It is a company that works for a regulated lender, such as a bank or an NBFC (a finance company that is not a bank and is registered with RBI). The LSP may run the loan app or website, find customers or handle other parts of the loan process for the lender. It is an agent. It is not the lender itself.

This set-up is allowed. Many loan apps and “Pay Later” buttons are run by LSPs. But RBI’s Digital Lending Directions, 2025 set rules on how the app must deal with you.

A real-life example

Ravi, 26, downloads a loan app and asks for ₹15,000. The app’s brand name is all over the screens. When he opens the KFS (Key Facts Statement, the short loan summary he gets before signing), the lender named there is a different company: a registered NBFC. The app is the LSP. The NBFC is the lender.

What this means for Ravi:

  • The ₹15,000 should arrive in his bank account straight from the NBFC.
  • His repayments should go straight to the NBFC’s account, shown in the KFS or app.
  • If someone asks him to send ₹15,600 to a personal UPI ID “to close the loan faster”, that breaks the rule on money flow. It is a warning sign.
  • If the app closes down, he still owes the NBFC, and the NBFC is still responsible for the loan.

Fictional example. No real app or lender is meant.

What the rules say

  • The app must clearly show which regulated lender gives each loan. The KFS and loan agreement must name that lender too.
  • Money must move directly between you and the lender. It should not pass through an account of the LSP or anyone else.
  • If an LSP shows offers from several lenders, it must show all the matching offers in a neutral way, so you can compare them.
  • Digital loans come with a KFS and a cooling-off period of at least 1 day, when you can leave the loan without a penalty.

RBI also publishes a list of digital lending apps that regulated lenders say they use. The list is based on what lenders report, and RBI says it does not check it. So an app on the list is linked to a lender, but that alone does not make the loan right for you. An app that is missing from the list is a serious warning sign.

What an LSP is not

It is not a bank or NBFC, even if the app looks like one.

It is not someone you should pay. Fees before the loan is paid out, or repayments to a person’s account, are red flags.

It is also not a reason to share more than needed. Never share your OTP, UPI PIN or bank passwords with an app or its agents.

What to check

  1. Find the lender’s legal name in the app’s “lending partners” page or the KFS.
  2. Check that the lender is a bank or appears on RBI’s list of registered NBFCs.
  3. Look for the app on RBI’s list of digital lending apps (rbi.org.in, Citizen’s Corner).
  4. Make sure the payout comes from the lender and repayments go to the lender.

If an app or its agents threaten you or message your contacts, read A loan app is threatening you. For fraud or threats, call 1930 or report at cybercrime.gov.in. To complain about the lender, start with the grievance officer named in your KFS.

Frequently asked questions

What is an LSP in digital lending?

LSP stands for lending service provider. It is a company, often a loan app or website, that works for a bank or NBFC to find borrowers and handle parts of the loan process. It is an agent, not the lender. RBI's Digital Lending Directions, 2025 say the app must clearly show which regulated lender gives each loan.

How do I find out who the real lender is in a loan app?

Look at the app's 'lending partners' or 'About' page, the KFS (Key Facts Statement) and the loan agreement. They must name the lender. Then check that it is a bank or appears on RBI's list of registered NBFCs. You can also look for the app on RBI's list of digital lending apps, under Citizen's Corner on rbi.org.in.

Should I pay my loan to the app or to the lender?

To the lender. RBI rules say money must move directly between you and the lender, both the payout and your repayments. The account details should be in the KFS or the app's official repayment screen. If anyone asks you to pay into a personal UPI ID or a person's bank account, stop and check with the lender first.

Who do I complain to about a loan app?

Start with the grievance officer named in your KFS or in the app. The regulated lender is responsible for the loan, even if an LSP runs the app. If the problem is not solved, you can take it further with RBI. For threats, harassment or fraud, call 1930 or report at cybercrime.gov.in.