Lok Sabha Question No. 122 (UNSTARRED), answered on 2022-07-18
Subject: Digital Lending Platforms
Ministry: FINANCE
Asked by: Aparajita Sarangi

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

## LOK SABHA UNSTARRED QUESTION NO.122

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

## Digital Lending Platforms

## 122. SHRIMATI APARAJITA SARANGI:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has taken measures to address the grievances relating to aggressive digital lending by various platforms;
- (b) if so, the details thereof and penalties introduced for violation;
- (c) the details of the number of victims, persons or firms, who have fallen prey to malpractices of such digital lending platforms;
- (d) whether  the  Government  has  identified  types  of  malpractices  adopted  by  the  digital  lending platforms;
- (e) if so, details thereof and the corrective measures taken by the Government in this regard; and
- (f) whether the Government has mandated digital lending platforms to follow guidelines to increase transparency in their transactions and loan approval process and if so, the details thereof?

## ANSWER

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

(a)  to  (f):  Reserve  Bank  of  India  ( RBI)  has  introduced  ' The  Reserve  Bank  -  Integrated  Ombudsman Scheme,  2021'  wherein complaints  against  Banks  and  Non-Banking  Financial  Companies  (NBFCs) regarding digital lending can be lodged. Under the said scheme, the Ombudsman shall have power to pass an award for any consequential loss suffered by complainant upto Rs 20 lakh, in addition to, upto Rs 1 lakh for the loss of the complainant's time, expenses incurred and for harassment/mental anguish suffered by the  complainant.  Further,  the  Department  of  Supervision,  RBI  has  been  designated  as  the  nodal department for dealing with complaints against unauthorised digital lending platforms/Mobile Apps and a mechanism to handle specific references on unauthorised digital lending platforms/ Mobile Apps has been laid  down.  Also,  RBI  has  established  a  portal  named  as  'Sachet'  under  State  Level Coordination Committee mechanism for registering complaints by public. On Sachet portal, complaints against lending apps promoted by entities not regulated by RBI are sent to concerned Registrar of companies for Ministry of  Corporate  Affairs  registered  ent ities,  and  to  Economic  Offences  Wing  of  complainant's  State  for unincorporated bodies and individuals.

As per RBI, during the period 1.4.2021 to 31.3.2022, 7,813 complaints have been received against banks and NBFCs pertaining to digital lending application/apps and against recovery agents/ harassment by recovery agents under the Integrated Ombudsman Scheme of RBI.

RBI has constituted a Working Group on digital lending including lending through online platforms and mobile apps, to study all aspects of digital lending activities in the regulated financial sector as well as by unregulated players. The thrust of the report has been on enhancing customer protection and making the digital  lending ecosystem safe and sound while encouraging innovation. As per findings of this report, majority of the complaints pertain to lending apps promoted by entities not regulated by the RBI such as companies  other  than  NBFCs,  unincorporated  bodies  and  individuals.  Major  concerns  raised  in  such complaints were issues of exorbitant interest and charges levied by digital lending apps, and harassment of customers for loan repayments. Further, vide press release dated 23.12.2020, RBI had cautioned the general public not to fall prey to unscrupulous activities of unauthorised digital lending platforms/Mobile Apps and verify the antecedents of the company/ firm offering such loans. RBI has also issued advisories to State Governments to keep a check on unauthorised digital lending platforms/Mobile Apps through their respective law enforcement agencies.

Further, as per information provided by the Ministry of Electronics and Information Technology (MeitY), to have an Open, Safe & Trusted and Accountable Internet, Government has notified the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 under the Information Technology (IT) Act, 2000. The said Rules provides for removal of such apps, if an app is considered unlawful under the extant law, through playstore/appstore (intermediaries) as and when requested by an appropriate government or its authorised agency.

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