Loan apps: RBI receives 2,562 lawsuits

The Reserve Bank of India (RBI) received 2,562 complaints against digital loan apps during the 15 month period ending March 2021.

“Complaints against DLAs – Sachet, a portal set up by the Reserve Bank as part of the State Level Coordination Committee (SLCC) for the registration of complaints by the public, is receiving a significantly increasing number of complaints against apps for digital lending,” according to the RBI- Working group on digital lending said in a report.

“Most of the complaints relate to the loan of apps that are sponsored by companies that are not regulated by the Reserve Bank, such as: B. Companies other than NBFCs, unincorporated corporations and individuals, ”the report said. Another significant part of the complaints concerns the loan of apps that work with NBFCs, especially smaller NBFCs (asset size less than Rs.1000 billion).

Maharashtra reported the maximum number of 572 complaints, followed by Karnataka 394 complaints, Delhi 352 complaints and Haryana 314 complaints.

According to the report, 600 out of 1100 loan apps currently available are illegal apps. “And if the number of loan apps grows, that trend would increase because a user who downloads a loan app cannot tell whether the app is legitimate or not. It is also likely that several copycat apps and websites will pop up on the Internet, ”it says.

When a consumer uses such an app or website, they may collect the user’s personally identifiable information (PII), financial information, and other sensitive details that can then be used to compromise the user’s accounts, conduct phishing attacks, and identity theft. “Aside from affecting the user, it is also damaging to the company’s reputation that the fake app is pretending to be,” the report said. “There is an increase in fake customer care scams on the Internet, especially those involving financial services and online businesses. These scams are used to gather sensitive information from users and defraud them, ”it says.