RBI cancels PC Financial Service's certificate of registration

The company violated the central bank's directions on outsourcing and KYC norms and was also found to be charging very high interest rates and other charges from its borrowers

The Reserve Bank of India (RBI) on Thursday cancelled the certificate of registration of PC Financial Services, a non-banking finance company, which was engaged in mobile app-based lending business through its app called ‘Cashbean’, citing a number of violations including charging exorbitant rate of interest and other charges to its borrowers in an opaque manner.

The company violated the central bank’s directions on outsourcing and “Know Your Customer” norms and was also found to be charging very high interest rates and other charges from its borrowers in an opaque manner, the RBI said in a statement. It was also involved in unauthorised use of logos of RBI and Central Bureau of Investigation for recovery from its borrowers, which is a violation of the Fair Practices Code, the RBI said.

RBI has tightened its noose around digital lending applications, after it received hundreds of complaints during the pandemic that many apps were allegedly resorting to unfair practices, such as charging exorbitant rates, using illegal recovery practices, etc.

During the pandemic, the number of lending apps went up substantially as financial distress gripped the nation. According to the central bank’s working group report, there were approximately 1,100 lending apps for Indian android users across more than 80 application stores from January 1, 2021, to February 28, 2021. Of these, 600 were illegal.

Earlier this month, the enforcement directorate had seized Rs 288 crore from PC Financial Services vide 3 seizure orders issued under the provisions of Foreign Exchange Management Act, 1999 (FEMA).