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Court call on online loans

The petition comes two days after the banking regulator announced the formation of a working group to study all aspects of digital lending activities
A bench of Chief Justice D.N. Patel and Justice Jyoti Singh issued a notice to the finance ministry and the banking regulator seeking their stand on the plea, which has claimed that such lending platforms charge very high interest rates on the loans given by them.
A bench of Chief Justice D.N. Patel and Justice Jyoti Singh issued a notice to the finance ministry and the banking regulator seeking their stand on the plea, which has claimed that such lending platforms charge very high interest rates on the loans given by them.
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Our Bureau   |   Mumbai   |   Published 16.01.21, 03:29 AM

The Delhi high court on Friday sought a response of the central government and the Reserve Bank of India (RBI) on a PIL seeking the regulation of online lending platforms offering short-term personal loans at exorbitant interest rates through mobile apps.

A bench of Chief Justice D.N. Patel and Justice Jyoti Singh issued a notice to the finance ministry and the banking regulator seeking their stand on the plea, which has claimed that such lending platforms charge very high interest rates on the loans given by them.

A PTI report said the petition has been moved by a Telengana-based Dharanidhar Karimojji, who works as a freelancer in the digital marketing space, claiming there are more than 300 mobile applications that provide instant loans ranging from Rs 1,500 to Rs 30,000 for 7-to15 day periods.

However, these money lending platforms deduct almost 35 per cent to 45 per cent of the loan as platform fees, service charges or processing fees and only transfer the remaining money to the borrower’s bank accounts, the petition has said.

The petition comes two days after the banking regulator, which wants to implement an appropriate regulatory framework for such platforms, announced the formation of a working group to study all aspects of digital lending activities.

The panel, chaired by RBI executive director Jayant Kumar Dash, will suggest regulatory measures to promote orderly growth of digital lending.

According to the terms of reference for the working group, it has been asked to evaluate digital lending activities and assess the penetration and standards of outsourced digital lending activities in RBI regulated entities, and identify risks posed by unregulated digital lending to financial stability, regulated entities and consumers.

Advocate Prashant Bhushan, appearing for Karimojji, told the court that these entities pose a menace as they charge exorbitant interests rates of 1 per cent or more per day and in the event of non-payment of delay in repayment of the loaned amount, they call up everyone on the borrower’s contact list to humiliate and harass them into making payments.



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