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A new worry for fintech lenders
Will the uncovering of reckless and potentially fraudulent Chinese lending apps will drive the RBI to look at regulations for the sector?
5 January, 2021•17 min
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5 January, 2021•17 min
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Editor's note: “Borrowers must only borrow from firms that are either registered with the RBI or regulated by state governments. It has also mandated digital lending platforms to state the names and addresses of banks or non-banking finance corporations (NBFC), upfront.” This warning from a 23 December notification by the Reserve Bank of India is worrisome, to say the least, for the fast-growing but troubled industry of fintech lending. The RBI’s caution follows several complaints about borrowers falling prey to a growing number of “unauthorized” digital lending platforms and mobile apps offering payday loans, and even reports of suicides by borrowers unable to repay loans issued on these apps. Moreover, it comes as the fintech lending market has been rocked by what has been termed a “multi-crore loan apps scam”, featuring a slew of apps created by Chinese firms. Across Indian fintech lenders, the worry now is that the regulatory fallout will swamp them. “There is this fear among the industry players that if these suicides go to a next level then the RBI will one day come and say, ‘shut all …
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