Digital loan fraud: RBI warns small businesses and individuals against unauthorized loan applications

The fintech industry in general, and the lending industry in particular, are looking to build new products on a scalable architecture created with initiatives such as account aggregation.

Credit and financing for MSMEs: The Reserve Bank of India on Wednesday warned small businesses and individuals against lending through unauthorized digital lending apps. The central bank issued a notification following reports of these borrowers “plagued by a growing number of unauthorized digital lending platforms / mobile apps promising to get loans fast and hassle-free.” she said in a statement. The bank also urged borrowers to check the backgrounds of lenders offering loans online or through mobile apps. The digital lending space in India has proliferated in the recent past through models such as peer-to-peer, pay later, bill finance, bank-led digital models, markets and more adopted. by mainstream companies and businesses.

The RBI had in June of this year, following complaints against online lending platforms regarding high interest rates, lack of transparency in the methods of calculating interest, unauthorized use of user data, etc. ., had said that NBFCs and banks had to indicate the names of the online platforms they work with. “Reserve Bank has also required that digital lending platforms used on behalf of banks and NBFCs disclose the name of the bank (s) or NBFCs to customers,” he said in the statement. The central bank had also requested loan applications to issue a sanction letter to the borrower on the letterhead of the relevant bank / NBFC before the execution of the loan agreement.

Read also : Late payments: MSMEs see rejected claims increase by 74% since March

“Legitimate public lending activities may be undertaken by banks, NBFCs, registered with the RBI, and other entities regulated by state governments under statutory provisions, such as laws on lending money from States concerned, ”RBI said. Among recent cases related to online loan fraud, Hyderabad police arrested 11 people in Delhi, Gurgaon, while Cyberabad police arrested six others in Hyderabad. In a press note released on Tuesday, Hyderabad police said they recorded nearly 16 FIRs linked to loans made by alleged unauthorized loan apps and the harassment of victims by companies that operate those apps.

The Indian digital loan market has seen a significant increase over the years. The value of digital loans has grown from $ 33 billion in FY15 to $ 150 billion in FY20 and is expected to hit $ 350 billion by FY23, according to Statista. Some of the major market players include Capital Float, Zest Money, Indifi, KredX, BharatPe, Lendingkart, Paisabazaar, etc.

Get Live Stock prices of ESB, NSE, American market and last net asset value, portfolio of Mutual fund, Discover the latest IPO News, The best performing IPOs, calculate your tax by Income tax calculator, know the market Best winners, Top losers & Best equity funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay up to date with the latest news and updates from Biz.

About Jimmie T.

Check Also

Inmates Eligible for Care Act $ 1,200 IRS Stimulus Checks; Here is how to deposit

2 million inmates are eligible for stimulus checks of $ 1,200. They must check the …