What happened? The Reserve Bank of India (RBI) on May 25 cancelled the Certificate of Registration (CoR) issued to five Non-Banking Financial Companies (NBFCs) for improper lending practices. Why? The registrations have been "cancelled on account of violation of RBI guidelines on outsourcing and Fair Practices Code in their digital lending operations undertaken through third-party apps which was considered detrimental to public interest. These companies were also not complying with the extant regulations pertaining to charging of excessive interest and had resorted to undue harassment of customers for loan recovery purposes," RBI said in a press release. Which NBFCs? UMB Securities Limited: Lending through an app called Fastapp Anashri Finvest Limited: Lending through services and apps called Datimes, Bullintech Finance, TGHY Trustrock, Mrupee, Kush Cash, Karna Loan, Mr Cash, FlyCash, and More Chadha Finance Private Limited (now known as Chadha Finance Limited): Lending through an app called Wifi Cash Alexcy Tracon Pvt Ltd: Lending through an app called Badabro Jhuria Financial Services Private Limited: Lending through services and apps called Aeritech, Finclub Technologies, MoNeed, MoMo, CashFish, Kredipe, RupeeLand, and Rupee Master Why does it matter? Over the last couple of years, hundreds of digital lending apps have popped up on Google’s Play Store targeting vulnerable Indian borrowers, charging them exorbitant interest rates, and resorting to extortion and blackmail tactics to collect payments. A quick Google search of some of the apps listed above will reveal a trove of consumer complaints alleging harassment and other improper recovery tactics. While illegal (unlicensed) apps are the major culprit, there are lenders with all the…
