As it is useful and necessary to have a more borrowed environment, lawmakers and regulators should be concerned about the negative consequences. Recent incidents involving the evil tactics used by some digital lenders, to get their due, are unfortunate. Indeed, the Reserve Bank of India (RBI) warning about the dangers of unauthorized digital lending platforms and mobile applications could not be rushed sooner or later. The RBI has asked the public to be careful who it borrows from warning that some lenders are working beyond the legal framework and may appear to be dishonest.
Given how easy it is to set up a digital store, it’s no surprise that there are so many apps. It is also not surprising that small business owners and individuals become vulnerable victims because they simply cannot afford to borrow money from a bank or the NBFC. But one cannot really blame borrowers, who really need money to finance their businesses or personal emergency, by going to them. Throughout the decades, the Indian banking system has not changed and has developed enough to cater to the needs of more lenders; Loan requirements today clearly exceed the maximum loan amount. That is despite the fact that, over the past decade, we have seen several new banks and NBFCs, as well as new types of mediators – MFIs, small financial banks – are coming.
Of course, one cannot expect banks or other lenders to lend without adequate effort; after all, they are the ones who keep public savings and they should assess the risks they take. However, it is true that we have not been able to create a credit system to meet the needs of many lenders, especially at a time when loans from the corporate sector are often negligent and without due diligence. In fact, if it were not for Jan Dhan Yojana, the vast majority of people would not have a savings account. Also, if it were not for the efforts of MFIs, most rural people would not be able to start small businesses as they did; Families in these villages will continue to be kind to lenders. In many ways, few of the degree lenders are money lenders, equally hateful, and perhaps cruel. One could argue that they are fulfilling a requirement – in terms of an agreement reached between the two parties – therefore, it is more useful than a bank that decides not to risk anything at all but to deposit its deposits in government. However, they have to work in accordance with the law, we cannot have illegal organizations doing business. Instead of resorting to force to repay their loans, they need to do a better risk assessment. Personally, as the RBI points out, borrowers need to be cautious about taking out loans. Digi lenders can write a check without asking too many questions, but they will go a long way to get their look. There is no free lunch.