The Reserve Bank of India has warned against taking out loans via unlicensed internet platforms or mobile apps that promise a quick and painless transaction. The warning comes as a massive rapid lending app fraud with a multi-city network has revealed in the country.
Three persons have committed suicide in the last few weeks as a result of alleged debt collector harassment, while 17 people have been detained in Delhi, Gurugram, and Hyderabad.
"There have been complaints of people and small businesses falling prey to an increasing number of unlicensed digital lending platforms/Mobile Apps that promise quick and easy loans. Excessive rates of interest and other hidden charges are being requested from borrowers, as well as the employment of undesirable and harsh recovery tactics, as well as the misuse of agreements to access data on borrowers' mobile phones, according to the RBI's notification.
Banks, non-banking financial organisations registered with the RBI, and entities regulated by state governments can all make legitimate loans, according to the RBI, which urged people to check the background of entities providing quick, lucrative loans on various digital platforms.
"Members of the public are now reminded not to fall prey to such unethical practises and to verify the antecedents of the company/firm offering loans online or through mobile apps," the statement stated.
RBI advised people to never provide copies of KYC documents with unknown people or use unverified/unauthorized apps, and to report such fraudulent actions to law enforcement agencies through the RBI's Sachet portal (https://sachet.rbi.org.in).
"The Reserve Bank has also directed that digital lending platforms deployed on behalf of banks and NBFCs reveal the identity of the bank(s) or NBFC(s) to clients upfront," according to the notice.
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