Thinking of taking loan from digital lending platforms? RBI cautions borrowers

KEY STORY

•  Owing to increased cases of harassment by unauthorised lending platforms of borrowers, the Reserve Bank of India (RBI) which regulates the sector, on Wednesday urged citizens to be wary of unauthorised digital lending platforms and mobile apps for taking loans.

• The RBI has taken note of several reports about individuals, small businesses falling prey to a growing number of unauthorised digital lending platforms, mobile apps on promises of getting loans in quick and hassle-free manner.

• The central bank, in a statement issued Wednesday, expressed concern on high-interest rates, hidden charges and dubious recovery methods adopted by these platforms.

  “These reports also refer to excessive rates of interest and additional hidden charges being demanded from borrowers; adoption of unacceptable and high-handed recovery methods; and misuse of agreements to access data on the mobile phones of the borrowers,” the RBI statement said.

• The central bank added only RBI-registered banks and non-banking financial companies (NBFCs) can undertake legitimate lending activities.

• Legitimate public lending activities can be undertaken by banks, non-banking financial companies (NBFCs) registered with RBI and other entities who are regulated by the state governments under statutory provisions, such as the money lending acts of the concerned states, the RBI statement further added.

  “Members of the public are hereby cautioned not to fall prey to such unscrupulous activities and verify the antecedents of the company, firm offering loans online or through mobile apps”

CONCLUSION

• 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 this

• RBI portal (https://sachet.rbi.org.in) to file an online complaint”.

  Reserve Bank has also mandated that digital lending platforms which are used on behalf of banks and NBFCs should disclose the name of the bank or NBFC upfront to the customers.

• The names and addresses of the NBFCs registered with the Reserve Bank can be accessed here and the portal for filing complaints against the entities regulated by the RBI can be accessed through this portal