Bombay : The Reserve Bank of India (RBI) announced on Thursday that it has canceled the certificate of registration of PC Financial Services Private Ltd, the company behind the digital lending application Cashbean.

The company’s registration was revoked due to oversight concerns such as flagrant violations of RBI’s guidelines on outsourcing and knowing your clients’ standards, RBI said.

Controversy over loan apps has exploded amid the covid-19 pandemic when laid-off people have been forced to seek out quick loans, often with one-click loan apps. However, when borrowers could not repay these loans, which carried exorbitant interest rates, companies resorted to coercive collection tactics.

RBI said the company also charges usurious interest rates and other fees to its borrowers in an opaque manner, in addition to engaging in unauthorized use of the RBI and Central Bureau of Investigation (CBI) logos for collection. from borrowers in flagrant violation. of the code of good practice.

“In exercise of the powers conferred under Section 45-IA(6)(iv) of the Reserve Bank of India Act 1934, the Reserve Bank has canceled the certificate of registration ( CoR) issued to M/s PC Financial Services Pvt Ltd., New Delhi As such, M/s PC Financial Services Private Limited shall not transact the business of a Non-Banking Financial Institution (NBFI), as defined to subsection (a) of Section 45-I of the RBI Act of 1934,” RBI said in a statement on its website.

In November last year, a committee set up by the central bank suggested limiting controversial digital lending apps through a mix of regulations, including the creation of a nodal agency to verify their credentials and legislation to prevent “illegal lending”.

The goal of the report was to improve customer protection and secure the digital lending ecosystem while encouraging innovation. The Reserve Bank of India (RBI) had set up a task force on digital lending, including online platforms and mobile apps, led by its executive director Jayant Kumar Dash in January 2021 after allegations of coercive tactics by Debt recovery.

According to the committee’s findings, around 1,100 loan apps were available for Indian Android users between January 1 and February 28. Of those, 600 were illegal, the panel found.

Meanwhile, the PTI news agency reported on February 9 that a FEMA competent authority confirmed the seizure of Funds worth 288 crores from a Chinese-owned Non-Banking Financial Company (NBFC) who lent instant loans through mobile apps and then allegedly harassed borrowers by misusing their personal data. He said an order had been issued by the Commissioner of Customs, Chennai on February 4 confirming the full seizure of funds in the action against “PC Financial Services NBFC”, citing a statement from the Management of the Law Enforcement (ED).

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