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The Delhi High Court today directed the Reserve Bank of India to respond on a plea seeking regulation of Online Lending Platforms charging exorbitant rates of interest from small borrowers.

The division bench of Chief Justice DN Patel and Justice Jyoti Singh was hearing a plea filed by Dharanidhar Karimojji through Advocate Prashant Bhushan seeking regulation of online lending platforms who were charging upto 500% per annum along with processing fee of upto 30% from small borrowers.

The petitioner has also sought directions to stop harassment of borrowers through recovery agents and to set up a grievance redressal system in every state.

Advocate Prashant Bhushan appearing for the petitioner said that though the RBI was aware of the problem but all that they did was constituted an internal committee of 6 members which was required to file a report within a period of 3 months. The time period expired in the month of April, however the RBI has not said anything about the report.

He further said that once any kind of lending company is under the definition of Non Banking Financial Institution, it comes under the supervision of the RBI under Section 45 of the RBI Act.

Advocate Ramesh Babu MR appearing for RBI however submitted that online lending platforms did  not fall under the supervision of RBI as it regulated only banking and non banking financial institutions.

Observing that the petition was "one of the finest PIL's for the interest of Public at large" Chief Justice Patel said that everyday several frivolous petitions are filed in the name of a PIL which are dismissed by the Court  but the present petition being of public interest, the RBI ought to take a stand on regulating and fixing the interest rates for these online lending platforms.

The Court further observed "They are small people and the rate of interest you must specify. Certainly they can charge interest but not so much...A circular should be there. We will constitute a committee if you people are so slow. You have to specify the interest rate upto 2 lakh. These people will be covered in 1 lakh only. They are small borrowers."

The Court accordingly directed the Union government and RBI to file their affidavits and listed the matter for next hearing on August 27.

Case Title: Dharanidhar Karimojji vs UOI and Anr