A monitoring mechanism to identify illegal loan applications is requested


The state government has requested the Reserve Bank of India to establish a market watch mechanism to identify illegal lending apps that operate in violation of RBI guidelines so that action can be taken against them.

“Many lending apps exist in Google Play Store against RBI guidelines. They do not disclose the names of associated Non-Banking Financial Companies (NBFCs),” the government said in a statement submitted to the RBI. to the increase in loan application crimes in the state and the state said that of 61 cases reported to the National Cybercrime Reporting Portal in 2021, the number has risen to 900 this year with 107 FIRs filed and eight people committing suicide.

A detailed finance department analysis of reported fraud identified 213 loan applications and 80 NBFCs associated with them. Of these NBFCs, 33 were identified as registered with the RBI and the rest were not. “Additionally, many applications did not display any NBFC details and could not be established through our analysis based on available data,” said Special Chief Finance Secretary K. Ramakrishna Rao, in the memorandum submitted to RBI.

Some lending apps misused the names of NBFCs despite not actually being associated with them. The RBI should therefore publish the list of NBFCs and associated lending applications on the website and keep updating it in real time. This would help the public as well as law enforcement to identify unscrupulous apps in the market.

Many NBFCs violated RBI standards in that they did not have an office at the declared address and did not have a mechanism for resolving customer complaints, which was in violation of RBI standards. Apex Bank should therefore take action to cancel the registration of these NBFCs. Steps should be taken to ensure that illegal digital money lending platforms clearly disclose to customers the associated bank/NBFC, as well as the grievance mechanism. “They must also clearly display the nature of the user data they capture as well as the privacy policy,” the department said in the memorandum submitted to the recent conference of state finance secretaries.


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