The Delhi High Court was informed on Wednesday that the Reserve Bank of India has already started the process of regulating digital lending, including lending through online platforms and mobile apps.
The divisional bench consisting of Acting Chief Justice Vipin Sanghi and Justice Navin Chawla dealt with a plea seeking to regulate online lending platforms on the grounds that these platforms exploit borrowers by charging exorbitant interest on loans.
During the hearing, Lead Counsel V. Giri, appearing on behalf of RBI, argued that the Task Force report on digital lending, including lending via online platforms and mobile apps, is being broadcast to invite the general public to comment.
In light of the above, the Chamber granted a deadline for the regulator to file a report on the status of the measures taken to implement said report and adjourned the matter to July 20. 2022.
The instant public interest litigation was filed by attorney Prashant Bhushan on behalf of a certain Dharanidhar Karimojji, alleging that unregulated platforms offer and provide loans to the needy through online applications.
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The plea claimed that these platforms deducted almost 30%-45% of the loan money as platform fees, processing fees, etc., and only transferred the remaining money to the bank accounts of the borrower. The plea further claimed that these platforms charge exorbitant interest rates of 1% or more per day on the fast loans they provide to borrowers.
In this regard, the petition sought to regulate and control the operation of online digital lenders doing business through mobile applications or any other platform; and a directive to end the practice of charging exorbitant loan interest to borrowers.
In addition, the advocacy aimed to curb harassment of borrowers from debt collectors of online digital lenders; and a fixing of the maximum interest rate that can be charged by online digital lenders.
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He further prayed for the establishment of a grievance mechanism for borrowers to resolve issues faced by online digital lending app operators or their agents within a specific timeframe.
Notices were published about this in January last year.
In line with the matter in the Delhi High Court, RBI formed a committee to suggest ways and means to regulate these platforms, which submitted its report in November last year. The final process will be shaped after considering input from the general public to the report.
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