Borrow loans through mobile apps? Beware of interest rates


You can come across a number of online lending platforms that offer instant loans through mobile apps. The Delhi High Court has requested the Reserve Bank of India (RBI) to file a progress report on the steps taken to implement the report of a committee set up to examine the issue of these lending platforms in line offering short-term personal loans at exorbitant interest rates via mobile apps, according to a PTI report.

A bench of Acting Chief Justice Vipin Sanghi and Justice Navin Chawla was informed on Wednesday by Senior Counsel V Giri, representing the RBI, that the committee’s report is circulating to invite comments from the general public.

The court said, “let the respondent file a report on the status of actions taken to implement the report before the next court date.” He scheduled the case for a rehearing on July 20.


The court was hearing a PIL seeking to regulate online lending platforms offering short-term personal loans at exorbitant interest rates via mobile apps, and allegedly humiliating and harassing people for late repayments.

During the hearing, Barrister Prashant Bhushan, representing petitioner PIL, said nothing was done by the government or RBI even after receiving the committee’s report and added that the threat continues.


The court was hearing the petition filed by Telangana-based Dharanidhar Karimojji, who works as a digital marketing freelancer, saying there are more than 300 mobile apps that offer instant loans ranging from Rs 1,500 to Rs 30,000 for periods from 7 to 15 days.

However, these money lending platforms deduct almost 35% to 45% of the loan as a platform fee, service fee or processing fee and only transfer the remaining money to the bank accounts of the borrower, the petition states.


Earlier, RBI’s lawyer said that it regulates banks and non-bank financial companies and does not regulate online lending platforms and that the central government has the power to do so.

The RBI had said that a committee has already been set up which must submit its report.

The High Court had previously observed that online lending platforms, offering short-term personal loans via mobile apps, could not be allowed to charge exorbitant interest rates and processing fees.

He had said an expert body was needed to look into the problem and added that he expected the Center and the RBI to come up with a solution.


The plaintiff’s lawyer had told the court that these entities posed a threat because they charged exorbitant interest rates of one percent or more per day and in the event of non-payment or delay in repaying the loaned amount, they called everyone on the borrower’s contact list to humiliate and harass him into making payments.

He had said the prayer was to stop charging exorbitant interest rates to borrowers and added that the RBI was fully aware of the problem but no action had been taken.


The High Court in January previously issued opinions and requested responses from the Center and the Ministry of Finance to the petition which claimed that these lending platforms were charging exorbitant interest on the loans they provided.

The plea said that even the RBI issued a press note warning the general public against such platforms.

He asked for instructions from the ministry and RBI “to regulate and control the operation of online digital lenders doing business through the mobile app or any other platform” and prevent them from charging exorbitant interest on borrowers’ loan. .

The plea also asked for instructions from the ministry and RBI to end harassment of borrowers by debt collectors, set a maximum interest rate chargeable by online digital lenders, and put in place a grievance mechanism in each State to solve the problems encountered. by the borrowers within a specific time frame.

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