The Reserve Bank of India has said it had formed a working group to look into digital lending practices, after reports of policy offenses and debtor harassment by several digital lending apps in the country.
The current spurt of popularity of mobile and online financing systems “has raised certain serious concerns which have wider systemic implications,” the RBI said in its launch.
The regulator said on Wednesday, it was establishing a six-member working group to rate digital financing activities and identify dangers posed by unlicensed electronic lending to monetary stability, regulated entities and customers.
In December, the RBI had issued a note about financing apps, warning that a participated in “unscrupulous activities”, like charging excessive interest rates and fees.
And a recent investigation by news agency Reuters found that at least 10 lending apps on Google’s Play Store at India violated Google’s rules on loan repayment spans targeted at protecting vulnerable borrowers. Journalists at our partner news agency Reuters discovered a number of lending apps also flouted RBI regulations aimed at protecting borrowers.
The lending app business has also drawn the scrutiny of police. They’re exploring dozens of apps following the suicides of two borrowers from the last month, because of claims of alleged harassment by collection agencies kept by those apps.
The working group, comprising four inner RBI and two outside members, was advised to submit their accounts in just three weeks, the release said.
The group has also been asked to examine other facets of digital lending, such as information privacy and security, and to propose changes to expand regulatory scrutiny of apps which often act as intermediaries, putting them outside the RBI’s purview.
The team at Platform Executive hope you have enjoyed this news article. Translation from English to other languages via Google Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Swati Bhat and Nupur Anand. Editing by Larry King.
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