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Synopsis

The Reserve Bank of India on Thursday informed the Delhi High Court that a regulatory framework to support orderly growth of credit delivery through Digital Lending methods while mitigating the regulatory concerns has been firmed up.

A division bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad has listed the matter for further hearing on January 12, 2023, as the affidavit by RBI was not on record.

The bench was hearing a plea filed by Dharanidhar Karimojji through Advocate Prashant Bhushan seeking regulation of online lending platforms that were charging up to 500% per annum along with a processing fee of up to 30% from small borrowers.

Bhushan submitted that after the Court had issued notice in the matter, the Government issued a circular for the lending platforms in general, and later an expert committee submitted its report and since then the Government has been taking time.

However, the counsel appearing for the Reserve Bank of India informed the bench that they have framed a regulatory framework and annexed the same on their affidavit, however, the same was not on record.

Further, Bhushan submitted that there are several platforms that are not registered as an NBFC, and the authorities are in power to take appropriate action. "There are many of these digital lending platforms who lend on exorbitant amounts of interest and employ strong-arm tactics to recover this money. So, we need a redressal system," Bhushan added.

The bench, while observing that the affidavit filed is not on record, listed the matter for further hearing in January.

However, LawBeat has obtained a copy of the affidavit, and the same states that a regulatory framework to support orderly growth of credit delivery through Digital Lending methods while mitigating the regulatory concerns, has been firmed up.

Furthermore, the affidavit filed by the RBI states that "the said regulatory framework is expected to address the concerns relating to unbridled engagement of third parties, mis-selling, breach of Data Privacy, customer grievance redressal, unfair business conduct, and unethical recovery practices."

It has been advised that the Regulated Entities of RBI and any Lending Services Providers/ Digital Lending Apps engaged by them are to be mandatorily guided by the regulatory stance conveyed in the framework.

The affidavit has been filed in view of an order of the High Court over the implementation of the report of the Working Group on 'Digital Lending including Lending through Online Platforms and Mobile Apps'.

Case Title: Dharanidhar Karimojji Vs. Union of India & Anr.