In the past couple of months, there have been several states across the country which noted suicides among those who had failed to pay the loans back availed digitally using a mobile application. Sources have confirmed at least five deaths are reported, that were allegedly anticipated due to a harsh loan recovery method employed by these digital money lending platforms.
In late December The Reserve Bank of India issued a message of notification to the public against the use of unauthorized money lending apps from referring to recent reports by the media on immoral collection practices along with charging some random interest rates on their borrowers by some of these apps. The RBI also reported, there has been news about individuals and the small scale businesses who have been falling into the trap against the growing number of unauthorized digital lending platforms as well as Mobile Apps on vows of getting loans quickly and conveniently through them.
NBFCs is only one licensed bank and there are other few non-banking financial companies given authorization by the central bank of India that can indulge to do public lending activities quoted by the central bank itself. Ahead this year, RBI had also issued an explicit set of guidelines over favorable lending methods that can be followed to protect the interest of lenders and borrowers. During late December, it was reported that over a few percentages of these customers had missed deadlines to repay the loan amount, owing to intensified stress levels in the pockets of the consumer especially during the economy regaining from pandemic-induced nowadays. Even during June, it reported about a dozen of lending apps in detail on how they are exercising unethical practices like cyber-bullying and oppression moves to persecute their customers who were found as defaulters on such payment against the loan.