Loan Apps: RBI Cancels Registration of 5 NBFCs for Irregular Lending Practices
Moneylife Digital Team 26 May 2022
The Reserve Bank of India (RBI) has cancelled certificate of registration (CoR) of five Non-banking financial companies (NBFCs)  for violation of norms related to outsourcing and fair practices code in their digital lending operations. The banking regulator cited irregular lending practices of the companies as the reason for its action.
 
NBFCs whose CoR stands cancelled are: UMB Securities Ltd, Anashri Finvest, Chadha Finance, Alexcy Tracon, and Jhuria Financial Services. The companies had been carrying out their business under the names Fastapp Technologies, Datimes, Bullintech Finance, TGHY Trustrock, Mrupee, Kush Cash, Karna Loan, Mr Cash, FlyCash, Wifi Cash, Badabro, Aeritech, Finclub Technologies, MoNeed, MoMo, CashFish, Kredipe, RupeeLand and Rupee Master.
 
"The CoR of the (five) NBFCs have been cancelled on account of violation of RBI guidelines on outsourcing and Fair Practices Code in their digital lending operations undertaken through third party apps which was considered detrimental to public interest," RBI said.
 
It further said these companies were also not complying with the extant regulations pertaining to charging of excessive interest and had resorted to undue harassment of customers for loan recovery purposes.
 
This notification is the second major instance of regulatory action against app-based lenders after allegations of usurious and abusive practices being followed by several digital lenders first emerged in 2020.
 
It may be recalled that, in February 2022, RBI had cancelled the CoR issued to PC Financial, which carried out lending operations through an app called Cashbean. Wednesday’s notification is the second major instance of regulatory action against app-based lenders after allegations of usurious and abusive practices being followed by several digital lenders first emerged in 2020.
 
After a huge public outcry over the excesses committed by digital lending apps in 2020, RBI had set up a working group to present a report on the regulation of such apps. The group’s recommendations, released in November 2021, range from subjecting digital lending apps (DLAs) to a verification process by a nodal agency to dedicated legislation to prevent illegal digital lending activities.
Comments
parimalshah1
1 month ago
Names of the android apps used b these companies are also required for public in general to know that these are rogue apps.
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