Lok Sabha Question No. 119 (UNSTARRED), answered on 2022-07-18
Subject: Harassment by Fintech Companies
Ministry: FINANCE
Asked by: Pushpendra Singh Chandel

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO. †119

To be answered on the 18 th July 2022/Ashadha27, 1944 (Saka) Harassment by Fintech Companies

## †119 .SHRI KUNWAR PUSHPENDRA SINGH CHANDEL:

Will the Minister of FINANCE be pleased to state:

- (a) whether cases of harassment of debtors by the Fintech companies have come to light of the Government;
- (b) if so, the details thereof;
- (c) whether the Government is taking any concrete steps to make new rules for the said companies and for the compliance of the same; and
- (d) if so, the details thereof?

## ANSWER

## THE MINISTER OF STATE FOR FINANCE (DR. BHAGWAT KARAD)

(a) to (d): As per Working Group constituted by Reserve Bank of India (RBI) on digital lending, FinTech platforms generally collect data from customers. FinTech platforms also track information such as customers' spending and social media patterns to generate an alternative  credit  score  for  determining  their  risk  profile.  While  accepting  terms  and conditions of these platforms, customers are generally signing away their privacy rights. This  leads  to  concerns  about  protection  of  customers'  data  from  unauthorised  access , explicit  consent  and  awareness of customers about  harvesting of  their personal/ online behavioural data and sharing of data with third parties. Several consumer complaints were analysed by RBI that cite instances of digital lenders or digital lending apps misusing the data collected. Certain lending apps are using this data to follow up with the borrower's contacts in case of delays in repayment.

RBI has issued guidelines on 'Loans Sourced by Banks and NBFCs over Digital Lending Platforms: Adherence t o Fair Practices Code and Outsourcing Guidelines' dated 24.6.2020. In terms of these guidelines, wherever banks and NBFCs engage digital lending platforms as their agents to source borrowers and/ or to recover dues, they must follow the following instructions:

- Names of digital lending platforms engaged as agents shall be disclosed on the website of banks/ NBFCs.
- Digital lending platforms engaged as agents shall be directed to disclose upfront to  the  customer,  the  name  of  the  bank/  NBFC  on  whose  behalf  they  are interacting with the customer.
- Immediately  after  sanction  but  before  execution  of  the  loan  agreement,  the sanction letter shall be issued to the borrower on the letter head of the bank/ NBFC concerned.
- A copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement shall be furnished to all borrowers at the time of sanction/ disbursement of loans.
- Effective  oversight  and  monitoring  shall  be  ensured  over  the  digital  lending platforms engaged by the banks/ NBFCs.
- Adequate efforts shall be made towards creation of awareness about the grievance redressal mechanism.

Also,  appropriate  guidelines  have  been  prescribed  by  RBI  for  both  banks  and  NBFCs suggesting measures to be undertaken to ensure stability and security of their IT systems and  prevent  incidences  of  cyber  breaches  which  may  have  implications  on  consumer protection.

Further,  Consumer  Protection  Act,  2019  is  also  applicable  to  banking  and  financing services, which provides for enforcement of consumer rights and has brought e-commerce and electronic service providers within its ambit and is hence applicable to digital lenders and their agents. The Act inter-alia has specific provisions prohibiting false and misleading advertisements, and unfair trade practices.

Also, Ministry of Home Affairs has created Indian Cyber Crime Coordination Centre (I4C) to deal with cyber crimes in coordinated and effective manner.

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