The Reserve Bank of India (RBI) cautioned people and small businesses against illegal digital lending apps. Issuing a notification in this regard, the central bank said, ‘there have been reports about individuals and small businesses falling prey to the growing number of unauthorised digital lending platforms and mobile apps on promises of getting loans in a quick and hassle-free manner.’
Illegal digital lending apps misuse data of borrowers
According to RBI, these reports refer to unacceptable and high-handed recovery methods and misuse of agreements to access data on the mobile phones of the borrowers. The bank also urged borrowers to verify the antecedents of the lenders offering loans online or through mobile apps.
How to avoid trap laid by illegal digital lending apps
RBI has suggested some steps users can take to avoid such incidents in the future:
1) People looking to borrow money must verify the antecedents of the companies offering loans online or via mobile apps.
2) Legitimate public lending activities can be undertaken by Banks, Non-Banking Financial Companies (NBFCs) registered with RBI and other entities being regulated by the State Governments under statutory provisions of money lending acts.
3) RBI has strongly advised against sharing KYC documents with unidentified persons or apps.
4) In case a person comes across an unverified or unauthorised digital lending platform they must inform the concerned law enforcement authorities about it.
5) The complaint related to the unauthorised digital lending platform must be registered online on Sachet portal (https://sachet.rbi.org.in).
6) The central bank has made it mandatory for all digital lending platforms used by RBI-registered banks and NBFCs to disclose the names of the bank and NBFC directly to the consumers. People can visit the RBI portal to check the list of NBFCs registered with the regulator.
7) 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 this portal.
Also Read: From RTGS to IMPS: 5 best ways to transfer money online
India’s digital lending market has seen a significant rise over the years. The digital lending value increased from $33 billion in FY15 to $150 billion in FY20, according to Statista, a leading provider of market and consumer data.
RBI to lenders: Stop charging compound penal interest on loans
Why women must take care of their finances
Axis-Citi deal: What changes for Citibank cardholders in India