RBI cautions against unauthorised digital lending platforms, mobile apps

The Reserve Bank (RBI) on Wednesday cautioned the public not to fall prey to the growing number of unauthorised digital lending platforms and mobile apps.

In a release, the RBI noted that there have been reports about individuals/small businesses falling prey to such unauthorised platforms and apps which promise quick and hassle-free loans.

Reports also refer to excessive rates of interest and additional hidden charges being demanded from borrowers; adoption of unacceptable and high-handed recovery methods; and misuse of agreements to access data on the mobile phones of the borrowers, it added.

“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,” the RBI said.

The central bank also asked customers to never share copies of know your customer (KYC) documents with unidentified persons or unauthorised apps and “report such Apps/Bank Account information associated with the Apps to concerned law enforcement agencies.” Besides, the Sachet portal (https:achet.rbi.org.in) can also be used to file an online complaint.

Legitimate public lending activities can be undertaken by banks and non-banking financial companies (NBFCs) registered with RBI and other entities who are regulated by the state governments under statutory provisions.

The Reserve Bank has also mandated that digital lending platforms which are used on behalf of banks and NBFCs should disclose name of the bank/NBFC upfront to the customers. The names and addresses of the registered NBFCs can be accessed on the RBI website.