Home » RBI cautions against unauthorised digital lending platforms

RBI cautions against unauthorised digital lending platforms

by Raju Vernekar
0 comments 2 minutes read

By Raju Vernekar
Mumbai, Dec.26:

The Reserve Bank of India (RBI) has cautioned users against unauthorised digital lending platforms and mobile applications that promise quick loans and has suggested some steps users can take to avoid such incidents. 
“Legitimate public lending activities can be undertaken by banks, non-banking financial companies (NBFCs) registered with the RBI and other entities who are regulated by state governments under statutory provisions, such as the money lending acts of the concerned states,” the RBI said in a statement. 
RBI said it has received several reports of individuals and small businesses falling prey to such digital platforms that charge high rates of interest or demand additional hidden charges from borrowers. Some such lenders also take recourse to high-handed recovery methods and even access private data saved on the mobile phones of the borrowers on the sly. 
The RBI has suggested some steps users can take to avoid such incidents in the future: To begin with, people looking to borrow money must verify the antecedents of the companies offering loans online or through mobile The RBI has strongly advised against sharing KYC documents with unidentified persons or unauthorised apps. 
In case a person comes across an unverified or unauthorised digital lending platform they must inform the concerned law enforcement authorities about it or visit the “Sachet Portal” to register a complaint online. Additionally, the RBI has also 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. The RBI has advised people to visit the RBI portal to check the list of Non Banking Financial Companies (NBFCs) registered with the regulator. 
There are over 250 small and large NBFCs in India and India is the only country in the world that licenses financial institutions in nine different type categories as NBFCs. NBFCs have relaxed policies but interest rates are higher. Unlike bank loans that are linked to external benchmarks, loans from NBFCs are linked to the prime lending rate (PLR). NBFCs are free to set the PLR, allowing them greater freedom in setting rates to suit customers demands. 
The NBFC crisis started with the failure of one of the most respected NBFCs in India, IL&FS, followed by struggles at DHFL, Reliance Capital, and the latest, Altico. This NBFC crisis is unique in the sense that it is both a driver and a reflection of the economic slowdown.

You may also like

Leave a Comment

ABOUT US

Imphal Times is a daily English newspaper published in Imphal and is registered with Registrar of the Newspapers for India with Regd. No MANENG/2013/51092

FOLLOW US ON IG

©2023 – All Right Reserved. Designed and Hosted by eManipur!

Adblock Detected

Please support us by disabling your AdBlocker extension from your browsers for our website.