Preparations have been made to crack down on loan lenders through app or digital platform. A working group of RBI has recommended setting up of a nodal agency to check the digital credibility of lending apps. The working group has also recommended the creation of a self-regulatory organization. Along with this, it has also been asked to bring such laws so that illegal activities related to giving loans can be curbed. After increasing complaints of arbitrariness and fraud on the part of digital apps and landing platforms, RBI has stepped in the direction of curbing these.
Here are the recommendations of the RBI Working Group
The Working Group has said in its recommendations that a nodal agency should be set up to examine the technical reliability of Digital Lending Apps (DLAs) on behalf of Balance Sheet Lenders and Loan Service Providers (LSPs). The report states that the nodal agency will be given the responsibility of maintaining a register of verified apps on its website.
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Complaints about trapping customers by fraud
The working group has recommended the enactment of a separate law to check illegal lending activities. It says that there should be a definite baseline technology standard for such apps and digital landing platforms. These apps should be made mandatory to comply with this standard before giving digital loans. The working group has said that the loan should be deposited directly into the customer’s bank account. Along with this, the loan should also go from the bank account of the digital lander. According to the Working Group, out of 1100 companies doing business of lending through app or digital lending platform (website) in India, 600 are doing business illegally.
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