Interest rates to processing fee, RBI brings relief for loan app borrowers

The new rule book should bring down interest rates and improve recovery methods

The Reserve Bank of India’s (RBI’s) strictures on loan apps comes at a time when questions are being raised about app-based lenders using unethical practices, such as charging exorbitant interest rates, non-transparent methods to calculate interest, unauthorised use of personal data, and harsh recovery measures.  

The loan-on-tap industry has been thriving for a while, with over 550 lending start-ups in the market. And there are allegations that some charge over 5-6 per cent as processing fee, when the usual fee is 1-2 per cent. In addition, some charged interest rates up to 400 per cent or even more, if calculated