“There have been reports about individuals/small businesses falling prey to growing number of unauthorized digital lending platforms/Mobile Apps on promises of getting loans in quick and hassle-free manner,” said RBI.
“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,” it added in the statement.
Only licensed banks and non-banking financial companies (NBFCs) given authorization by the central bank can do public lending activities, the central bank said. Earlier this year, RBI had issued a detailed set of guidelines over acceptable lending practices that can be followed by fintech apps.
Aggregators tying up with licensed banks and NBFCs would have to disclose upfront, the nature of these tie-ups, to improve transparency, the central bank had said.
Recently several reports have surfaced of excess interest charged, additional hidden charges and unethical collection practices including misuse of agreements to access data on the mobile phones of the borrowers by the collection agents of these fintech lenders.
ET on Tuesday reported that over one-third of these customers had missed repayment deadlines owing to increased stress in several pockets of consumer economy recovering from pandemic-induced curbs.
In June, ET had reported in detail about dozens of lending apps resorting to cyber-bullying and intimidation tactics to harass customers who were missing on such payments. Some of them included Cashbean, Loanfront, Mad-Elephant, Cashe, mPokket, Cahsbus, CashMama, Timely Cash, Robocash, Kissht, LoanTime and UCash at the time.
There is no official count of how many such digital lending apps exist. However, industry insiders peg the number at several hundreds. The digital lending apps predominantly target blue-collar and self-employed segments with the promise of easy liquidity.
However, on failing to repay on time the borrowers are sent fake legal notices. In some instances, family members of borrowers also have allegedly received reminder messages in a bid to socially intimidate the customers.