The Reserve Bank has cancelled Certificate of Registration (CoR) of five NBFCs who had been offering their services through app-based platforms. The central bank cited violation of norms related to outsourcing and fair practices code in their digital lending operations.
Non-Banking Financial Companies (NBFCs) whose CoR stands cancelled are: UMB Securities Ltd, Anashri Finvest, Chadha Finance, Alexcy Tracon, and Jhuria Financial Services.
“The CoR of the (five) NBFCs have been cancelled on account of violation of RBI guidelines on outsourcing and Fair Practices Code in their digital lending operations undertaken through third party apps which was considered detrimental to public interest,” the RBI said.
It further said these companies were also not complying with the extant regulations pertaining to charging of excessive interest and had resorted to undue harassment of customers for loan recovery purposes.
Earlier in February, RBI had cancelled the CoR issued to PC Financial, which carried out lending operations through an app called Cashbean. After a furore over the excesses committed by digital lending apps in 2020, the RBI had set up a working group to present a report on the regulation of such apps.