The digital lending platforms, whose services are used by banks, must also disclose upfront to the customer the name of the bank or NBFC on whose behalf they are interacting with them. Also, immediately after sanction, but before the execution of the loan agreement, the sanction letter must be issued to the borrower on the letterhead of the lender.
“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,” said the RBI in its notification to all lenders.
The RBI’s guidelines come after reports that app-based lenders are using underhand methods for recovery of loans during the lockdown. Since most of the app-based lenders ask for full access to the phone contacts, some are using this information to reach out to those on the contact list of borrowers. There have also been instances where the defaulting borrower has been blackmailed by recovery agents threatening to use private information.
Some of these lending apps require access to messages as they use bank alerts to assess the borrower’s cash flows and diligence in bill payment. In some cases, the app-based lenders did not disclose the actual cost of the loan after including interest and other charges. Also, in many cases, the lending platforms did not divulge who the actual lender is, thereby denying the borrower an opportunity for grievance redressal.
In Video:RBI cracks down on loan apps for malpractice