Lok Sabha Question No. 817 (UNSTARRED), answered on 2022-12-12
Subject: Digital Lending Platforms
Ministry: FINANCE
Asked by: Vincent H Pala

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## LOK SABHA UNSTARRED QUESTION NO- 817

ANSWERED ON- 12/12/2022

## DIGITAL LENDING PLATFORMS

## 817. SHRI VINCENT H. PALA

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 violations;
- (c) the  details  of  the  number  of  victims,  persons,  or  firms,  who  have  fallen  prey  to malpractices of digital lending platforms;

(d) whether the Government has identified types of malpractices adopted by the digital lending platforms and if so, the details thereof and the corrective measures taken by the Government in this regard; and

(e) 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 and if not, the reasons therefor?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (DR. BHAGWAT KARAD)

(a) to (e):  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 complainants up to Rs. 20 lakh, in addition, up to Rs. 1 lakh for the loss of the complainant's time, expenses incurred and for harassment/mental anguish suffer ed by the complainant. Further, the Department of Supervision, RBI has been designated as the nodal department for dealing with complaints against unauthorized digital lending platform/Mobile Apps and a mechanism to handle specific references on unauthorized 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 entities, and to Economic Offences Wing of complainant's State for unincorporated bodies and individuals.

As  per  RBI,  during  the  period  1.4.2021  to  30.11.2022,  12903  complaints  have  been received against banks and NBFCs pertaining to digital lending applications/apps and against recovery agents/harassment by recovery agents under the Integrated Ombudsman Scheme of RBI.

RBI  had  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.  As  per  findings  of  this report,  majority  of  complaints  pertain  to  lending  apps  promoted  by  entities  not regulated  by  RBI  such  as  companies  other  than  NBFCs,  unincorporated  bodies  and individuals.  Major  concerns  identified  in  the  report  pertains  to  issues  of  mis-selling, breach  of  data  privacy,  charging  of  exorbitant  interest  rates,  intrusive  method  of recovery, lack of transparency and lack of grievance redressal mechanism.

RBI, vide press release dated 23.12.2020, had cautioned the general public not to fall prey to growing number of unauthorised digital lending platforms/Mobile Apps on promises of getting loans in quick and hassle-free manner. RBI has also issued advisories to State Government to keep a check on unauthorized digital lending platforms/Mobile Apps through their respective law enforcement agencies.

Further, RBI has issued guidelines on digital lending on September 02, 2022 aimed at firming up the regulatory framework for digital lending to all lenders including banks to support  orderly  growth  of  credit  delivery  through  digital  lending  while  enhancing customer protection and making the digital lending ecosystem safe and sound. Further, Government  has  issued  the  Information  Technology  (Intermediary  Guidelines  and Digital Media Ethics Code) Rules, 2021 under Information Technology (IT) Act, 2000. The said Rules provides for removal of such apps, which are considered unlawful under the extant law, through play store/App store (intermediaries) as and when requested by an appropriate government or its authorized agency.

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