With the culture of quick credit gaining pace, more and more users are falling prey to loan recovery agents who sometimes use harsh methods like calling up customers at odd hours, and even resort to using foul language. From April 2021 to March 2022, the Reserve Bank of India (RBI) has received as many as 7,813 complaints in this regard.
The complaints were against banks and non-banking financial corporations (NBFCs) concerning digital lending apps and harassment by recovery agents. The central bank has formed a Working Group on digital lending including loans through online platforms and apps, to examine all the facets of digital lending activities in the regulated financial sector as well as by unregulated players.
Maharashtra leads in number of complaints
Maharashtra had the greatest number of complaints, followed by Karnataka, Delhi, Haryana, Telangana, Andhra Pradesh, Uttar Pradesh, West Bengal, Tamil Nadu, and Gujarat.
Maximum complaints made to the RBI pertain to lending apps promoted by entities not regulated by the bank like companies other than NBFCs, unincorporated bodies and individuals. Complainants flagged issues like exorbitant interest and charges levied by digital lending apps, and harassment of customers for loan repayments.
Last month, RBI Governor Shaktikanta Das reflected upon how technology has disrupted the financial sector along with the opportunities and challenges it has brought about. He also announced that the central bank will soon roll out guidelines to make digital lending ecosystem safe and sound.
The central bank had cautioned the common man to stay safe and not fall prey to unscrupulous activities of unauthorised digital lending platforms or apps and verify the antecedents of the company/ firm offering such loans.
In view of the same, the Reserve Bank has advised State Governments to keep an eye on unauthorised digital lending platforms.
Moreover, the bank is also likely to bring out guidelines for fintech firms with respect to various aspects including credit operations and KYC norms.
A report by community driven social media platform Local Circles, such lending apps extract as much as 500 per cent interest rates and use extortion methods to collect money from borrowers or loan defaulters.
