Read Time: 04 minutes

Synopsis

Delhi High Court on Thursday reserved the orders on a plea seeking regulation of online lending platforms charging exorbitant rates of interest from small borrowers.

A bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad said that the Central Government shall be given time to consider recommendations tabled by the petitioner.

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.

Counsel appearing for the petitioner informed the bench that there are several lending applications on the Play Store, when the borrower is unable to return the money with predatory rates, they take contacts from the borrower's phone and call them. They even take private pictures from their phone and publish them on social media, this has led to several suicides in the country, he added.

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

It may also be noted that the Reserve Bank of India while submitting its response to the issue, stated 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 stated 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 had 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.