Online lending platforms offering over-the-counter loans: HC asks RBI to submit status report

NEW DELHI: The Delhi Supreme Court has asked the RBI to submit a status report on the steps taken to implement a committee report to look at online lending platforms offering short-term personal loans with high interest rates through mobile application rates. .
Deputy Chief Justice Vipin Sanghi and Justice Navin Chawla were briefed by Senior Lawyer V Giri, representing the Reserve Bank of India (RBI), that the commission’s report is being circulated to invite the general public to comment.
The court said, “let the defendant submit a status report on the steps taken to implement the report before the next hearing date.”
He raised the issue for further hearing on July 20.
The court heard a PIL calling for the regulation of online lending platforms that offer short-term personal loans at exorbitant interest rates through mobile apps and allegedly humiliate and harass people in the event of late payment.
During the hearing, attorney Prashant Bhushan, who appeared for the PIL petitioner, said nothing had been done by the government or the RBI even after receiving the committee’s report, adding that the threat continued.
The court heard the application filed by Telangana-based Dharanidhar Karimojji, who works as a freelancer in digital marketing, arguing that there are more than 300 mobile applications offering instant loans of Rs 1,500 to Rs 30,000 for periods of 7 to 15 days.
However, these money lending platforms deduct almost 35 to 45 percent of the loan as platform fees, service charges or processing fees and only transfer the remaining money to the borrower’s bank accounts, the report said.
Earlier, the RBI adviser had said that it regulates banks and non-bank financing companies and does not regulate online lending platforms and that the central government has the power to do so.
The RBI had said that a committee had already been set up to submit its report.
The Supreme Court had earlier noted that online lending platforms, which offer short-term personal loans through mobile applications, are not allowed to charge exorbitant interest rates and transaction fees.
He said an expert body was needed to look into the matter, adding that he expected the Center and the RBI to find a solution.
The petitioner’s lawyer had told the court that these entities pose a threat as they charge exorbitant interest rates of one percent or more per day and in case of non-payment or late repayment of the loan, call all the borrower’s contact list to humiliate him and harass him to make payments.
He said the prayer is to stop lending excessive rates to borrowers and added that the RBI is fully aware of the problem, but no action has been taken.
The Supreme Court, in January, issued earlier statements seeking answers from the Center and the Treasury Department over a report alleging that such lending platforms charge exorbitant interest on their loans.
The allegation said that even the RBI has issued a press release warning the general public about these platforms.
He has asked the ministry and the RBI to “regulate and control the operation of online digital lenders operating through the mobile app or any other platform” and prevent them from charging exorbitant interest on the loan from borrowers.
The allegation has also prompted the ministry and the RBI to stop harassing borrowers by retrieval agents, set a maximum interest rate charged by online digital lenders, and set up a grievance redressal mechanism in each state. faced by borrowers at a specific time.

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