Petition for the regulation of online lending platforms

The Delhi High Court on Friday requested a response from the Center and the Reserve Bank of India (RBI) to a petition seeking to regulate online lending platforms operating through mobile apps.

A bench of Chief Justice DN Patel and Justice Jyoti Singh issued an opinion to the Ministry of Finance and RBI asking their position on the petition, which claimed that these lending platforms were charging exorbitant interest on the loans they granted.

Dharanidhar Karimojji, who was represented by attorney Prashant Bhushan, claimed that more than 300 mobile apps offered instant loans ranging from ₹1,500 to ₹30,000 for a period of seven to 15 days.

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

The plea alleged that these entities were charging exorbitant interest rates of 1% or more per day and in case of non-payment delay in repaying the loaned amount.

Caution for the public

He said these entities even call everyone on the borrower’s contact list to humiliate and harass them into making payments. Mr Bhushan said the RBI had issued a press note warning the general public against such platforms.

The plea called for instructions to regulate and control the work of online digital lenders doing business through a mobile app or any other platform and prevent them from charging exorbitant interest on loans to borrowers.

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David A. Albanese