RBI warns public about shady digital lending apps promising quick finance

Informs public about exorbitant rates of interest charged by such apps, and use of muscle power to recover dues; guides on reporting rogue service providers

The Reserve Bank of India (RBI) on Wednesday warned consumers against the questionable digital money lending entities that promise loans in seconds at exorbitant rates of interest, and then use muscle powers to recover dues.  

“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 central bank said in a statement. 

“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,” it added.  

The central bank said all digital lending platforms used on behalf of Banks and NBFCs should disclose name of the bank or NBFC upfront to the customers.  

The names of and addresses of the NBFCs registered with the Reserve Bank can be accessed at the RBI website and the portal for filing complaints against the entities regulated by the RBI can be accessed through here. 

The central bank’s caution to the public comes after reports about individuals and small businesses falling prey to growing number of unauthorised digital lending platforms and mobile apps on promises of getting loans in quick and hassle-free manner.  

“These 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," the RBI said.