As a result, customers were not able to access grievance redressal avenues available under the regulatory framework.
The Reserve Bank of India (RBI) on Wednesday asked banks and non-banking financial companies (NBFCs) to make sure they adhere to the fair practices code guidelines in letter and spirit while lending through digital platforms. This is irrespective of whether banks and NBFCs lend through their own digital platforms or through an outsourced lending platform, the regulator specified.
Madhusdhan Ekambaram, CEO of a digital lending platform KreditBee, said, “With more emphasis on the fair practices from RBI, I am sure there would be more seriousness from the lenders, and the consumer will be at a much better place.”
The RBI said that it was observed that lending platforms tend to portray themselves as lenders without disclosing the name of the bank or NBFC at the back-end. As a result, customers were not able to access grievance redressal avenues available under the regulatory framework. The regulator has therefore asked names of digital lending platforms engaged as agents to be disclosed on the websites of the lenders.
RBI also said that a sanction letter shall be issued to the borrower on the letterhead of the concerned bank or NBFC. The RBI said there has been several complaints received against the lending platforms on exorbitant interest rates.
“Of late, there are several complaints against the lending platforms which primarily relate to exorbitant interest rates, non-transparent methods to calculate interest, harsh recovery measures, unauthorised use of personal data and bad behaviour,” the RBI stated.
The regulator said that any violation in this regard by banks and NBFCs will be viewed seriously.