The Reserve Bank of India has cautioned individuals and small businesses who are falling prey to unauthorised digital money lending platforms and apps. There have been multiple reports over the last few days of harassment, suicide and more due to these apps.
RBI, referring to reports, said they have excessive rates of interest and additional hidden charges that is being demanded from borrowers. These platforms, RBI says, adopt unacceptable and high-handed recovery methods and misuse agreements to access data on the mobile phones of the borrowers.
The central bank reiterated that legitimate public lending activities can be undertaken by banks, Non-Banking Financial Companies (NBFCs) registered with the RBI and other entities regulated by the state governments under statutory provisions, such as the money lending acts of the concerned states.
The RBI cautioned them not to fall prey to these apps, and not share their KYC documents with unidentified persons or unauthorised apps.
“Members of public are hereby cautioned not to fall prey to such unscrupulous activities and verify the antecedents of the company/ firm offering loans online or through mobile apps. Moreover, consumers should never share copies of KYC documents with unidentified persons, unverified/unauthorised Apps and should report such Apps/Bank Account information associated with the Apps to concerned law enforcement agencies or use Sachet portal to file an on-line complaint,” the RBI said.
It also said that it has mandated that digital lending platforms used on behalf of banks and NBFCs should disclose the name of the bank or NBFC upfront to 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,” RBI said.
In the past two months, several states across the country have reported suicides by those who were unable to repay the loans they availed from these apps. At least five of these deaths were allegedly due to harsh loan recovery methods employed by these platforms.