The Reserve Bank of India (RBI) on Wednesday warned consumers of unscrupulous lending institutions that promise loans in seconds at exorbitant prices, and then use muscle power to recover benefits.
Members of the public are cautioned not to fall victim to such fraudulent practices and to verify the background of the company/organizations that offers online loans or mobile applications.
Also, consumers should not share copies of KYC documents with anonymous, illegal/unauthorized applications and should report Apps / Bank Account details associated with applications to law enforcement agencies or use the Sachet website to lodge an online complaint, besides.
Central Bank said digital lending platforms used in the name of banks and NBFCs should disclose the name of the bank or NBFC to customers.
The names and addresses of NBFC registered with the Reserve Bank can be found on the RBI’s website and a complaint lodged with RBI-controlled organizations can be found here.
RBI warning came after the reports that stated that individuals and small businesses are being exploited by the increasing number of fraudster lenders who promise to give prompt and inexpensive loans.
The RBI says that wherever banks and NBFCs create digital lending platforms as their agents to find borrowers and/or get money, they must follow the RBI’s instructions. This includes:
a) The names of the digital lending platforms that act as agents will be disclosed on the banks / NBFC website.
b) The name of the lending bank/NBFC should be disclosed beforehand.
c) Immediately after the penalty but before the loan agreement is entered into, a letter of judgment will be served on the borrower at the letter of the bank / NBFC concerned.
d) A copy of the loan agreement and a copy of all the stipulations specified in the loan agreement will be provided to all borrowers at the time of the loan/withdrawal.
e) Effective monitoring and evaluation will be ensured at digital lending platforms used by banks / NBFCs.
f) Adequate efforts will be made to build awareness on how to resolve grievances.
Federal has found that many of these companies are backed by Chinese investors working with NBFC-licensed Indian NBFCs. In the Google PlayStore, loan applications such as CashBus, CashBean, InstaMoney, Money, Robocash, Cashmama, WifiCash, Money, Kissht, Loanflix among others are available at the click of a button.