The apex bank of the country on Wednesday cautioned individuals and small businesses against unauthorized loan apps as there have surfaced concerns regarding coercive recovery tactics and high interest rate charged by some of these lenders.
The Reserve Bank of India said, "There have been reports about individuals and small businesses falling prey to growing number of unauthorised digital lending platforms and mobile apps on promises of getting loans in quick and hassle-free manner". Additionally, in these reports there is also a mention of taking on to unacceptable and high-handed recovery methods as well as breach of agreements through which these lenders gain access to borrowers' data from their mobiles.
The report further added that members of public are hereby cautioned not to fall prey to such unscrupulous activities and verify the antecedents of the company offering loans online or through mobile apps."Moreover, consumers should never share copies of know your customer (KYC) documents with unidentified persons, unverified and unauthorised apps and should report such apps and bank account information associated with the apps to concerned law enforcement agencies or use sachet portal (https://sachet.rbi.org.in) to file an on-line complaint," the central bank said.
Earlier in June, the RBI said banks and NBFCs regardless of whether they engage in lending activity via their own digital loan platform or via an outsource entity need to adhere to fair practices guidelines in letter and spirit.
Another problem with regulating these digital lending apps is that a majority of them are not administered by the RBI being not registered as NBFC but fall under the aegis of money lending acts of several state governments.
Also, the RBI today mandated digital loan platforms, taken on to by banks and NBFCs to reveal the name of the lending entity backing them 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 https://cms.rbi.org.in," it said.