PIL seeks regulating online lending platforms; HC seeks Centre, RBI stand

These money lending platforms deduct almost 35 per cent to 45 per cent of the loan as platform fees

PIL seeks regulating online lending platforms; HC seeks Centre, RBI stand

Photo for representation only. Source: iStock.

New Delhi, January 15

The Delhi High Court Friday sought response of the Centre and the RBI on a PIL seeking regulation of online lending platforms offering short-term personal loans at exorbitant interest rates through mobile apps, and allegedly humiliating and harassing people in case of delay in repayment.

A bench of Chief Justice D N Patel and Justice Jyoti Singh issued notice to the Finance Ministry and Reserve Bank of India (RBI) seeking their stand on the plea which has claimed that such lending platforms charge exorbitant interests on the loans given by them.

The petition has been moved by a Telengana-based Dharanidhar Karimojji, who works as a freelancer in digital marketing, claiming there are more than 300 mobile applications which provide instant loans ranging from Rs 1,500 to Rs 30,000 for 7 to 15-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.

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.

Bhushan, assisted by advocate Omanakuttan K K, told the court that even the RBI has issued a press note cautioning the general public about these platforms.

The petition has sought directions to the ministry and RBI "to regulate and control working of online digital lenders doing business through mobile app or any other platform" and stop them from charging exorbitant interest on loan from borrowers.

The plea has also sought directions to the ministry and RBI to stop the harassment of the borrowers from recovery agents, fix a maximum rate of interest chargeable by the online digital lenders and to set up a grievance redressal mechanism in every state to resolve the problems faced by borrowers within a specific time. — PTI 

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