Digital Lending RBI Notification

RBI notification against unauthorized Digital Lending Platforms/Mobile Apps

RBI notification against unauthorized Digital Lending Platforms

The digital age and its new inventions in every field have increased the hassle with the vent of new technology flow. New lending platforms have come up with the digital lending platform and mobile applications. The aim was to reduce the stress from the traditional lending process and ease out the process of doing business. The purpose is to increase the flow of money in the market and help in the economy’s growth.

RBI Notification release on December 23, 2020, for digital lending platform 2020-2021/1819

The RBI, in the latest notification, stated that there had been multiple reports from small and medium business enterprises that are falling victim to the growing number of unregistered/ unauthorized digital lending applications and mobile applications promising to give loan.

The notification talked about the excessive rate of interest being charged over it, hidden charges demanded unnecessarily, unwanted recovery methods and misusing the customer’s data to track the data of the mobile phone of the users/borrowers.

Notification Aim for lending on the digital lending platform

digital lending platform
  1. Lending platforms governed by RBI

The RBI has explained through this notification that the NBFC or whether it is any other Bank that has a lending platform is governed by RBI.

  1. Lending from the registered money lender

Only legitimate/ authorized public lending is possible. This means borrowing from the registered money lender companies/institutions only.

  1. Regulated by Government Authorities
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The lending institutions are to be governed by RBI, and they are regulated by various state government authorities under statutory provisions that are money lending acts of the concerned states.

  1. Verify the name of the lending company

The public is now informed to not fall victim of the unethical activities and verify the name and operations of the company, who are offering loan online or through mobile applications.

  1. No sharing of KYC documents

There should not be any sharing of the copies of KYC registered documents with an unknown person or an unregistered mobile app.

  1. Proper reporting of accounts

There should be proper reporting of such accounts or Bank Accounts information, associated with the digital lending platform.

  1. Complaint about illegal activities

The reporting should be done at the appropriate law enforcement agencies or Sachet Portal to file an online complaint of digital lending platform.

  1. Disclosure of names of banks associated to customers

The RBI has asked these digital lending platforms which are working on behalf of the Banks or NBFC’s should adequately disclose their names of Banks to the customers properly.

The customers should regularly update themselves and check the RBI list concerning Banks and NBFC registered.

Reported Scams: Digital lending Platforms

There has been an increase in reported cases relating to the instant loan providers (cybercrime) or from lending on the digital platform. The cybercrimes reporting on digital lending have increased. It came in the eyes of legislators when the Hyderabad Police have reported the suicide of three individuals who fall prey to digital lending.

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Scam: Onion Credit Technologies Ltd and Credfox Technologies Pvt Ltd

In this case, a boy downloaded the online mobile application of lending loans by the name of Cash Mama from Google Play Store on January 8, 2020. He took the loan of Rs 5000, which after deductions of GST and some processing fee reached his bank account of Rs.3820. He uploaded on the application documents such as Adhaar Card and PAN details. He repaid the loan amount and started receiving calls from other applications of digital lending platforms like Hey Fish, Monkey Caps, Cash Zone, Water Elephant, and Mera Loan.

The boy took the loans 7 times from January 8 to September 21, 2020 and the total loan taken was Rs. 30,000/- for which he received in his account approximately Rs. 20,000/- after deduction and charges as framed by them. The loan was repaid by him in September only, for which he paid approximately around Rs.29,380/- according to the digital lending platform/company. However, the loan was not cleared till Dec 7, 2020. He was asked to pay another Rs. 8,634/- to other loan applications.
The recovery method of loans of these digital lending platforms was shocking, as they used to track the numbers of the customers. They make calls to relatives asking them to repay the loan with harassment.

Investigation Result

The investigation resulted that the digital lending platform was operated by two companies, Onion Credit Technologies Ltd and Credfox Technologies Pvt Ltd. The companies were in agreements with the NBFC’s to acquire the customers for the NBFC marketing, checking customer’s KYC, creditworthiness, loan origination, disbursement, and collection of loans from customers.

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To recover loans from the customers, they practice different methods based on buckets. The customers are divided on the basis of the number of days, which is called D-0 Bucket, after due date- from day 1 to 3 it is S1 Bucket, from day 4 to 10 day , it is S2 Bucket, from day 11 to 30 day, it is S3 Bucket. The customer who fails to pay is harassed, a hefty amount of interest is charged, and amount is processed after deducting processing fee and GST.

How can SCAMS be stopped?

  1. The only advice to the public is that these scams are result of our callous behavior.
  2. Public should never share nay PAN Card details without verification of the company.
  3. The government should stringent the legislations for lending companies.
  4. In digital platforms never share access of any call or photo records.
  5. Check the company details on the RBI website.


Innocent public is fooled by scamsters. The RBI notification for digital lending[1] is warning customers to be precautious when downloading any lending applications. First and foremost, the application has to be checked on the RBI website. If the application is fraud then report immediately to the Cyber Crime Cell. Before borrowing, verify the license while signing the agreements in its terms and condition clause and verify whether the permission has been obtained from the District Collector for its operation.

Read our article:All About Digital Lending and Its Business Models

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