The Reserve Bank of India (RBI) on Wednesday cautioned individuals and small businesses against falling prey to growing number of unauthorised digital lending platforms and mobile apps on promises of getting loans in quick and hassle-free manner.
These platforms charge excessive rates of interest and additional hidden charges, adopt unacceptable and high-handed recovery methods and misuse agreements to access data on mobile phones of borrowers.
"Members of public are hereby cautioned not to fall prey to such unscrupulous activities and verify the antecedents of the company/firm offering loans online or through mobile apps," said the central bank.
Moreover, consumers should never share copies of Know Your Customer (KYC) documents with unidentified persons, unverified/unauthorised apps and should report such incidents to concerned law enforcement agencies.
Legitimate public lending activities can be undertaken by banks, non-banking financial companies (NBFCs) registered with the RBI and other entities who are regulated by state governments under statutory provisions.