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RBI warns customers about predatory digital lending apps

The Reserve Bank of India (RBI) has warned borrowers and customers from availing loans from digital lending websites and mobile apps, which are unregulated entities. The warning comes in the wake of several borrowers committing suicides in recent weeks and months due to harassment they faced from purported employees and collect agents of these digital lending platforms. In its release, the central bank says that members of public should verify the antecedents of the company/ firm offering loans online or through mobile apps. "There have been reports about individuals/small businesses falling prey to growing number of unauthorised digital lending platforms/Mobile Apps on promises of getting loans in quick and hassle-free manner," it says. "Moreover, consumers should never share copies of KYC documents with unidentified persons, unverified/unauthorised Apps and should report such Apps/Bank Account information associated with the Apps to concerned law enforcement agencies or use Sachet portal (https://sachet.rbi.org.in) to file an on-line complaint." — RBI Press Release dated December 23, 2020 The RBI says that these excessive rates of interest, have hidden charges, unacceptable and high-handed recovery methods and the misuse of agreements to access data on the mobile phones of the borrowers. In June this year, it directed banks and non-bank lenders who use third-part fintech apps and websites to provide better transparency and  disclosures on their websites/apps and in the loan documentation. Lack of regulatory oversight Recently, politicians from Tamil Nadu raised this issue in public and to the Finance Ministry stating that the government should ban these…

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Reports on banking, payments, fintech and crypto-curencies. Additional reporting on media regulations, data protection and other areas.

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