The Delhi High Court today issued notice in a public interest litigation seeking regulation of online lending platforms (Dharanidhar Karimojji vs UOI).
A Division Bench of Chief Justice DN Patel and Justice Jyoti Singh sought response from Reserve Bank of India (RBI) and Central government in the petition by one Dharanidhar Karimojji.
It is the petitioner’s grievance that at present, there is no uniform law to regulate online digital lending platforms or cap the maximum interest rate or other charges being levied by the online lenders.
As a result, the digital lending companies are exploiting borrowers by charging very high interest on loan i.e., even 365 percent per annum and harassing them in case of default, the petitioner has submitted.
Emphasizing that a search on Google Play store App Store displays over 200 apps that are willing to put cash into the bank account of borrowers, the Petitioner has pointed out how they operate.
“The Petitioner has tested around 25 of Chinese loan and Fake apps to know how it works. Fake loan apps like wowcash, antcash, sealoan, panda loans, cashin, cashcat, cashbird ask for advance payment 199/- to 799/- but these never give loans. In the hurry to get easy loans, many overlooked the interest rates, penalties, and the track record of these lenders. Many started with borrowing small amounts (Rs. 500 to Rs. 50,000), but as their dependency rose, they ended up taking multiple loans until their cash flows dried up and they started defaulting,” the petition states.
Arguing that the State money lending laws as well as RBI circulars are not being implemented properly, the petitioner has added that some of the online loan App lenders are functioning under Non-Banking Financial Companies regulated by Reserve Bank of India.
“But it seems that RBI is not controlling the exorbitant interest rate other charges being imposed by these companies and not restraining them from harassing the borrowers,” the petition claims.
Apart from seeking guidelines to regulate online lending platforms, the petitioner has also prayed that a grievance redressal mechanism for borrowers be set up in every State, to resolve the problems they face from online digital lending App operators or their agents.
Advocate Prashant Bhushan appeared for the petitioner.
The matter would be heard next on February 19.