Online lending platforms giving loans at exorbitant rates: HC asks RBI to file status report

New Delhi: The Delhi High Court on Wednesday asked the RBI to implement the report of a committee to look into the issue of online lending platforms offering short-term personal loans at exorbitant interest rates through mobile apps. File a status report on the steps taken.

A bench of Acting Chief Justice Vipin Sanghi and Justice Navin Chawla was informed by senior advocate V Giri, representing the Reserve Bank of India (RBI), that the report of the committee is in circulation inviting comments from the public at large.

“Let the respondent file a status report on the steps taken for implementation of the report before the next date of hearing,” the court said.

It listed the matter for further hearing on July 20.

The court was hearing a PIL seeking regulation of online lending platforms offering short-term personal loans at exorbitant interest rates through mobile apps and allegedly humiliating and harassing people in the matter of delay in repayment. was demanded.

During the hearing, advocate Prashant Bhushan, appearing for the PIL, said that even after receiving the report of the committee, nothing has been done by the government or the RBI and said that the threat continues.

The court was hearing a petition filed by Telangana-based Dharanidhar Karimozhi, who works as a freelancer in digital marketing, claiming that there are over 300 mobile applications that charge Rs 1,500 for a period of 7 to 15 days. Provide instant loans up to Rs.30,000.

However, these money lending platforms deduct about 35 per cent to 45 per cent of the loan in the form of platform fee, service charge or processing fee and transfer the remaining money only to the borrower’s bank account, the petition said.

Earlier, the counsel for RBI had said that it regulates banks and non-banking finance companies and it does not regulate online lending platforms and the central government has the power to do so.

RBI had said that a committee has already been constituted which has to submit its report.

The High Court had earlier observed that online lending platforms offering short-term personal loans through mobile apps cannot be allowed to charge exorbitant rates of interest and processing fees.

It had said that an expert body is required to look into the issue and added that it is hopeful that the Center and the RBI will come up with some solution.

The counsel for the petitioner had told the court that these entities pose a threat as they charge exorbitant interest rates of one per cent or more per day and in the event of non-payment or delay in repayment of loan amount, they would call all does. Contact list of borrower to humiliate and harass them in making payment.

He had said that the prayer is to stop the borrowers from charging exorbitant interest rates and added that the RBI is fully aware of the problem but no action has been taken.

The high court, in January, had earlier issued notice and sought response from the Center and the finance ministry on a plea that claimed that such lending platforms charge exorbitant interest on loans given by them.

The petition states that the RBI has also issued a press note warning the general public about these platforms.

It has sought directions to the ministry and the RBI to “regulate and control the functioning of online digital lenders doing business through mobile apps or any other platform” and to prevent them from charging exorbitant interest on loans from borrowers. Said. Read also: Sensex at 75,000 by year end in bull market: Morgan Stanley makes big prediction

The petition has also sought a direction to the ministry and the RBI to stop harassment of borrowers from recovery agents, fix a maximum rate of interest to be charged by online digital lenders and set up a grievance redressal mechanism in every state. by the borrowers within a specified time. Read also: Lemon is being sold for Rs 400 a kg in Jaipur! Lemonade made a distinctive drink: report

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