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Exclusive: RBI received 4000 complaints about lending apps since the pandemic began

Predatory loan apps targetting gullible borrowers are thriving in India’s unregulated waters, but that may not be for long.

You are reading it here first: Starting from January 2020 till August 31, 2021, the Reserve Bank of India (RBI) received approximately 4000 complaints about digital lending apps, a response to an RTI filed by MediaNama has revealed.

The complaints were received through RBI’s Sachet Portal, which focuses on collecting information about ‘illegal activities of the unauthorised entities,’ the RTI response revealed. Earlier this month, the RBI came out with a report on regulating digital lending apps.

Rogue digital lending applications blew up during the pandemic, harassing unsuspecting Indians with sky-high interest rates and exploitative terms. Considering that most such instances of harassment are likely to have gone unreported, the actual number of reported cases is striking, pointing to the immense scale of the lending app problem.

How big is the lending apps problem in India?

While the true scale of the lending app problem is not known, some figures help us estimate how big the problem is in India:

  • 55,000 calls from victims: SaveThem India, a foundation started in March 2020 to counter the lending apps problem in India, has received over 55,000 calls from victims of harassment from lending apps in 16 months of existence, a representative of the foundation told MediaNama, The foundation has talked approximately 30 victims out of suicide, the representative said.
  • 1,100 loan apps: In a recent report, the RBI said that there are 1,100 total loan apps available across different app stores for Indian Android users, out of which 600 are illegal.

What is the RBI doing about rogue lending apps?

In January this year, the Reserve Bank of India constituted a Working Group to study all aspects of digital lending so that an appropriate regulatory approach can be put in place. A few notable suggestions made in the report include:

  • Lending apps must be verified by an independent nodal agency: An independent nodal agency styled as Digital India Trust Agency (DIGITA) should be set up to ensure that only authorised and trusted DLAs are used by consumers. This agency will be responsible for verifying digital lending and fintech apps before such apps are publicly distributed and will maintain a public register of all verified apps. (Recommendation)
  • The government can implement separate legislation for non regulated entities involved in lending: Similar to the Banning of Unregulated Deposit Scheme Act, 2019, the government may consider implementing the Banning of Unregulated Lending Activities (BULA) Act, which would cover all entities not regulated and authorized by RBI for undertaking lending business or entities not registered under any other law for specifically undertaking public lending business. (Recommendation)
  • A separate regulation for consumer protection pertaining to financial services may be implemented: Although the Consumer Protection Act, 2019 covers banking, financing, insurance as services under its ambit, the nature of a financial consumer and consumer of other goods and services differ vastly. To provide adequate recourse to financial consumers including that of digital lending, a separate National Financial Consumer Protection Regulation under the above Act may be developed. (Suggestion)
  • Law enforcement must proactively ensure no unauthorised call centers operate: The local law enforcement and police agencies must proactively surveil that no unauthorised call center operates from sites under their jurisdictions. The context for this suggestion is that rogue lending apps often harass victims through frequent phone calls made through call center representatives.  (Suggestion)

The entire list of recommendations made by the RBI to tackle unauthorised lending apps is available here.

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Figuring out subscriptions and growth at MediaNama. Email: nishant@medianama.com

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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