The Reserve Bank of India (RBI) on Wednesday cautioned consumers against falling prey to unauthorised digital lending platforms and mobile apps that are designed to cause financial frauds.
In its statement, RBI pointed out reports about individuals and small businesses being scammed by a growing number of unauthorised digital lending platforms and mobile apps on promises of getting loans in quick and hassle-free manner.
“Members of public are hereby cautioned not to fall prey to such unscrupulous activities and verify the antecedents of the company/firm offering loans online or through mobile apps,” RBI said.
The reports refer to excessive rates of interest and additional hidden charges being demanded from borrowers, adoption of unacceptable and high-handed recovery methods and misuse of agreements to access data on the mobile phones of the borrowers.
RBI has asked consumers to never share copies of know-your-customer (KYC) documents with unidentified persons, unverified or unauthorised apps, and should report such apps or the bank account information associated with the apps to concerned law enforcement agencies.
Complaints against unauthorised and illegal collection of funds can also be lodged online on RBI’s Sachet portal, here.
RBI reminded in its statement that legitimate public lending activities can be only undertaken by banks, non-banking financial companies (NBFCs) registered with it and other entities who are regulated by the state governments under statutory provisions.
The statutory provisions include the likes of money lending acts of states.
RBI also mandated that digital lending platforms which are used on behalf of banks and NBFCs should disclose the names of the bank(s) or NBFC(s) upfront to the customers.
In June, RBI had issued a notification to all banks and non-bank payment system operators, asking them to educate the public on secure digital payment methods.