RBI has canceled the Certificate of Registration of five Non-Banking Finance Companies (NBFCs). This happened during a major crackdown on digital lending irregularities in Mumbai.
The RBI said that the five NBFCs have violated outsourcing and fair practices code norms in their digital lending operations. These NBFCs also violated the norms of charging excessive interest and chose violence as a medium for recovery from the customers.
Fastapp Technologies and Anashri Finvest are the two Bengaluru-based digital lending platforms that have been banned from lending. Finvest operated through platforms like Datimes, Bullintech Finance, TGHY Trustrock Mrupee, Kush Cash, Karna Loan, Mr. Cash, Fly Cash, and others for the lending business.
The New Delhi-based NGFC, Chadha Finance has also been included in the ban list of RBI. Chadha Finance operated through WiFiCash.
The other two NBFCs are Alexcy Trackon, a Kolkata-based company that operated through Badabro, and Jhuria Financial Services, a Guwahati-based company.
Jhuria Financial Services operated through platforms like Aeritech, Finclub Technologies, MoNeed, MoMo, CashFish, Kredipe, RupeeLand, and Rupee Master.
All the above NBFCs have a history of harassment of their customers and adoption of illegal practices to lend and recover money. One of the few cases came to light as a customer was driven to suicide due to the harassment of the above NBFCs. Considering all the above, the RBI finally decided to ban these NBFCs.
The five NBFCs resorted to many illegal recovery methods like obtaining access to the borrower’s device and blackmailing borrowers using morphed photographs.
The investigation of these NBFCs also revealed that many unregistered lenders in these digital apps provided advances.
Amidst the whole chaos, Google has made a stern decision to allow only RBI- registered lenders to provide loan apps on its app store.
In November, the RBI panel had called for separate laws to curb digital lending. Recently, RBI consulted the digital lenders and fintech players and asked them to come out with new norms for online lending.