With instances of illegitimate lending apps and harassment for recovery on the rise, as well as with cases of suicide linked to loan collections, the RBI has issued a warning against such lending platforms.
Referring to reports on individuals and small businesses being harassed by unauthorised digital lending platforms, the RBI said, “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.”
It pointed to the fact that lending operations are only permitted for banks, NBFCs and other entities regulated by state governments under statutory provisions. RBI has also mandated that digital lending platforms disclose the name of the partner banks and NBFCs upfront to all consumers and SMB customers. As a public awareness measure, the central bank has also directed borrowers to verify these NBFCs and register any complaints through the official portal.