NS reserve Bank of India A recent report has revealed that in India, there are around 1,100 online lending apps on the internet platform. However, the shocking thing is that 600 of these apps for Android users in India, which were working on more than 80 application stores, were illegal. Propose a strong regulation for digital lending apps, a working group set up by the central bank recently called for legislation to subject these apps to verification to prevent scams. The committee was formed following complaints of digital loan fraud, including harassment and unfair recovery activities by several digitally powered apps. Digital loans are often full of scams, but this can be avoided if certain rules are followed.
Acknowledging the importance and benefits of technological advancements, the report stated, “…the over-reliance on third-party credit service providers has had unintended consequences, who unfairly sell to unsuspecting customers, Concerns over data privacy violations, unethical business practices and illegitimate operations.”
Keeping this caveat in mind, it is important for users to follow certain rules while taking loans from these instant digital loan apps, until the Center or RBI brings in new rules. “A nodal agency should be set up which will verify the technical credentials of the balance sheet lenders and DLAs of LSPs primarily working in the digital lending ecosystem. It will also maintain a public register of verified apps on its website,” the RBI suggested in its report.
Here are the things you should keep in mind while taking a loan from DLA’s digital loan applications:
– Check if your lender is RBI approved
You should know whether the lender you are taking the loan from is registered with RBI or not. You should first verify the credibility of the creditor, so that there is no problem in repaying the loan. Lenders not adhering to the KYC norms of RBI should immediately become a suspect, as they are not following the guidelines of the central bank.
– watch out for red flags
Unlike credible digital loan apps, which all follow RBI-mandated rules, scammers usually don’t even have a website. Even if some of them are listed, you need to take a good look at them to make sure that the apps are not run by fraudsters. You can also read reviews of apps in the App Store before making any decisions. Additionally, check if the app works with a Non-Banking Financial Company or RBI or NBFCs registered with the bank. Visit that NBFC to make sure they are actually dealing with it.
– Read and understand the terms and conditions
It is always important for you to read and understand the fine print before clicking the ‘Proceed’ button. This is important for everything else, but is especially important for digital loan apps. Read the terms and conditions before making a decision.
– Decline loans from informal sources
Stay away from un-verified loan apps as the increasing use of technology has led to a rise in cyber crimes related to borrowing. You should be wary of non-verified digital loan apps asking for personal details like bank details, credit card PIN or address.
– Don’t just look for low interest rates
Apart from interest rates, there are many other things that you should consider. If there are high pre-payment charges, processing fees or pre-closure charges, you should avoid those apps.
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