In an official statement, RBI said there have been reports of people falling prey to digital loan scam for fast and hassle-free loans.
“Members of the public are cautioned not to fall victim to such unscrupulous activity and to check the background of the company / firm offering loans online or via mobile applications,” the RBI said.
These platforms charge excessive interest rates and additional hidden fees, adopt unacceptable and overbearing recovery methods, and misuse agreements to access data on borrowers’ mobile phones.
Additionally, the central bank urged consumers not to share copies of KYC documents with unidentified people and unverified applications. It also asked people to report such apps or bank account information associated with the apps to interested law enforcement agencies or to use Sachet portal to file a complaint online.
The RBI notification came hours after reports that 19 people were arrested in Hyderabad and Gurgaon in connection with a nationwide money loan app scam. The “solution” of taking out and obtaining a loan has pushed a great number of people into a trap much deeper than the financial situation in which they find themselves.
People looking for instant loans first download an aggregation app, which directs them to apps that process the loan application after collecting Aadhar, PAN details, and a selfie of the applicant. They also request access to the users’ photo gallery and the list of telephone contacts. Although the loan is sanctioned immediately, the applicant has seven days to repay it. It is when the loan is not repaid that the problems begin.
The Reserve Bank said that legitimate public lending activities can be carried out by banks and non-bank finance companies (NBFCs) registered with the RBI and other entities that are regulated by state governments under legal provisions. It has also ordered that digital lending platforms that are used on behalf of banks and NBFC must disclose the name of the bank / NBFC in advance to customers.
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