Beware of illegal digital lending apps

#GS3 #ECONOMY #RBI

The Reserve Bank of India has advised public to be wary of unauthorised digital lending platforms and mobile apps.

  • The individuals and small businesses falling prey to a growing number of unauthorised digital lending platforms/mobile apps, the central bank said “members of public are cautioned not to fall prey to such unscrupulous activities.” 
  • It urged them to verify antecedents of the company/ firm offering loans online or through mobile apps.
  • The RBI reports cited the excessive rates of interest and additional hidden charges 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. 
  • They also pointed to how unauthorised digital lending platforms/mobile apps attracted borrowers with promise of loans in a quick and hassle-free manner.
  • 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 States concerned.

 

Online complaint

  • The central bank also advised consumers never to share copies of KYC documents with unidentified persons or unverified/unauthorised apps. They can report such apps/bank account information associated with the apps to law enforcement agencies concerned or use sachet portal.
  • The RBI had mandated digital lending platforms used on behalf of banks and NBFCs to disclose name of the bank(s) or NBFC(s) upfront to the customers. Coordinates of NBFCs registered can be accessed on RBI website. 
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