A quick search on Google Play Store for “instant loans” displays more than 170 apps that claim access to quick and easy money. Amidst reports of malpractices by some of these new lending platforms, India’s central bank has cracked down on them by imposing several conditions. 

The Reserve Bank of India (RBI) issued a notification listing out measures that lenders and their partner platforms (apps) would need to follow while providing borrowers with funds. A major shift relates to the bank or the NBFC providing borrowers with the loan agreement on its letterhead and disclosing the names of its digital lending platform partners.

What prompted the RBI action?

RBI cracks down on Fintech

(Image credit: Reserve Bank of India)

Ever since the lockdown resulting from the Covid-19 pandemic, the RBI has received several complaints against these lending platforms that function through apps. Complaints related to high interest rates, non-transparent methods of interest calculation, harsh recovery measures and unauthorized use of personal data. 



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