RBI warns the public about unauthorized digital lending applications
“There have been reports of individuals / small businesses falling prey to a growing number of unauthorized digital lending platforms / mobile apps promising to get loans in a quick and hassle-free manner,” said RBI.
“Members of the public are hereby cautioned not to fall prey to such unscrupulous activity and to check the background of the company / business offering loans online or through mobile apps,” he added in the press release.
Only licensed banks and non-bank financial corporations (NBFCs) authorized by the central bank can engage in public lending, the central bank said. Earlier this year, RBI released a detailed set of guidelines on acceptable lending practices that can be followed by fintech applications.
Aggregators partnering with licensed banks and NBFCs should disclose the nature of these reconciliations upfront, to improve transparency, the central bank said.
Recently, several reports have documented excessive interest charges, additional hidden fees and unethical collection practices, including the misuse of agreements to access data on borrowers’ cell phones by debt collectors. of these fintech lenders.
ET reported on Tuesday that more than a third of those customers missed repayment deadlines due to increased stress in several pockets of the consumer economy recovering from restrictions brought on by the pandemic.
In June, ET detailed dozens of loan applications employing cyberbullying and bullying tactics to harass customers who default on those payments. Some of them included Cashbean, Loanfront, Mad-Elephant, Cashe, mPokket, Cahsbus, CashMama, Timely Cash, Robocash, Kisht, LoanTime, and UCash at the time.
There is no official count of the number of these digital loan applications. However, industry insiders put the number in the hundreds. Digital loan apps primarily target the blue collar and freelance segments with the promise of easy cash.
However, in the event of non-repayment on time, borrowers receive false legal opinions. In some cases, family members of borrowers have also reportedly received reminder messages in an attempt to socially intimidate clients.