The Reserve Bank of India (RBI) has intimated about reports of individuals and small businesses falling prey growing number of unauthorized digital lending platforms/Mobile Apps on promises of getting loans in a quick and hassle-free manner.
“There have been reports about individuals/small businesses falling prey to the growing number of unauthorized digital lending platforms/Mobile Apps on promises of getting loans in a quick and hassle-free manner,” said RBI.
“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,” it added in the statement.
RBI also said in a statement that 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.
Only licensed banks and non-banking financial companies (NBFCs) given authorization by the central bank can do public lending activities, the central bank said. Earlier this year, RBI had issued a detailed set of guidelines over acceptable lending practices that can be followed by fintech apps.
Moreover, RBI stated that consumers should never share copies of KYC documents with unidentified persons, unverified/unauthorized Apps and should report such Apps/Bank Account information associated with the Apps to concerned law enforcement agencies or use Sachet portal to file an online complaint.
Notably, RBI has also mandated that digital lending platforms that are used on behalf of Banks and NBFCs should disclose the name of the Bank(s) or NBFC(s) upfront to the customers.
