Instant loan app scam: Don’t fall prey to unauthorised mobile apps, cautions RBI

The Reserve Bank of India has cautioned against loans being offered by unauthorised digital platforms, mobile applications promising a quick and hassle-free process. The note of caution comes amid a major instant loan app scam being surfaced in the country with its multi-city network.

Three people killed themselves in the past few weeks after alleged harassment from debt collectors following which 17 people have been arrested from Delhi, Gurugram and Hyderabad.

“There have been reports about individuals/small businesses falling prey to the growing number of unauthorised digital lending platforms/Mobile Apps on promises of getting loans in a quick and hassle-free manner. These reports also refer to excessive rates of interest and additional hidden charges being demanded from borrowers; adoption of unacceptable and high-handed recovery methods; and misuse of agreements to access data on the mobile phones of the borrowers,” the RBI said in its notice.

Legitimate loans can be offered by banks, non-banking financial companies registered with RBI and entities which are regulated by the state governments, the RBI said urging people to verify the background of entities which are offering easy, lucrative loans on various digital platforms.

“Members of the public are hereby cautioned not to fall prey to such unscrupulous activities and verify the antecedents of the company/ firm offering loans online or through mobile apps,” it said.

Urging people to never share copies of KYC documents with unidentified persons, unverified/unauthorised Apps, RBI said such fraudulent activities can be reported to law enforcement agencies or RBI’s Sachet portal (https://sachet.rbi.org.in).

“Reserve Bank has also mandated that digital lending platforms which are used on behalf of banks and NBFCs should disclose the name of the Bank(s) or NBFC(s) upfront to the customers,” the notice said.