MUMBAI: In a major crackdown on irregularities in digital lending, the Reserve Bank of India (RBI) has cancelled the certificates of registration of five non-banking finance companies (NBFCs). The RBI
said that these firms had violated the norms related to outsourcing and fair practices code in their digital lending operations. Also, they violated regulations on charging excessive interest and resorted to harassment of customers for recovery.
UMB Securities, which was using services of the digital platform provided by Fastapp Technologies, and Anashri Finvest, lending through multiple apps, are the two Bengaluru-based firms that cannot lend anymore. Anashri Finvest used apps/platforms provided by Datimes
, Bullintech Finance
, TGHY Trustrock Mrupee
, Kush Cash
, Karna Loan
, Mr Cash
, Fly Cash
and others for lending.
Chadha Finance, which operated from New Delhi and lent through WifiCash, has also seen its certificate cancelled. The other two companies that have been barred from operating as NBFCs are Kolkata-based Alexcy Tracon, which lent through Badabro, and Guwahati-headquartered Jhuria Financial Services, which lent through multiple platforms. These platforms of Jhuria include Aeritech, Finclub Technologies, MoNeed, MoMo, CashFish, Kredipe, RupeeLand and Rupee Master.
The central bank’s action comes at a time when multiple cases of harassment, with one victim being driven to suicide, brought to light the illegal practices adopted by digital lenders. Some of the illegal recovery tactics included obtaining access to the borrower’s device and blackmailing them using morphed, inappropriate photographs. An investigation revealed that many lenders providing advances using digital apps were not registered with the RBI.
Google has recently decided that it will allow only RBI-registered lenders to provide loan apps on its app stores. In November, an RBI panel had called for a separate law to curb digital lending. Recently, the RBI had a consultation with digital lenders and fintech players to come out with new norms for online lending.