New Delhi: According to a recent estimate by the Reserve Bank of India, there are over 1,100 online loan applications available in India on various internet platforms. Surprisingly, over 600 of these apps for Android users in India were illegal and they were distributed to over 80 app stores.
A task force established by the central bank recently proposed legislation that would subject these digital lending applications to verification in order to prevent scams. The committee was formed in response to accusations of digital loan fraud, which included harassment and unfair collection practices by many digitally exploited apps. Scams abound in the digital lending world, but they can be avoided if certain guidelines are followed.
“There have been unintended consequences due to greater reliance on third-party loan service providers who mis-sell to unsuspecting customers, concerns about data privacy breaches, business conduct unethical and illegitimate operations, ”the report says, recognizing the importance and benefits of technological advances.
With that caveat in mind, clients should follow a few simple guidelines when taking out a loan from these fast digital loan apps, at least until the Center or the RBI issues new guidelines. “In the digital lending ecosystem, a nodal agency should be established to assess DLA technology benchmarks from balance sheet lenders and LSPs.” The RBI said in its report that “it will also maintain a public registry of verified applications on its website.”
Points to keep in mind when taking out loans from DLA digital loan applications:
Check if your lender is approved by the RBI
You should check with the RBI to see if the lender you are borrowing from is registered. You must first check the credibility of the creditor to make sure that there are no problems with the repayment of the loan. Lenders who do not follow the RBI’s KYC guidelines should immediately be considered suspects because they are not following the central bank’s guidelines.
Keep an eye out for red flags
Unlike legitimate digital lending apps which follow all RBI mandated regulations, scammers rarely have a website. Even though some of them are mentioned, you should examine them carefully to make sure that the apps are not used by crooks. Before making a selection, you should check the app reviews in the App Store. Also check if the app works with a bank or non-bank financial company (NBFC) registered with the RBI. Check with this NBFC to see if they work with it.
Read the terms and conditions and make sure you understand them
It is essential that you read and understand the fine print before clicking the “Continue” button. It’s vital for everything, but it’s extremely crucial for digital lending applications. Before making a selection, read the terms and conditions.
Refuse to accept loans from unauthorized sources
Avoid unverified loan applications as the increasing use of technology has led to an increase in cybercrime related to borrowing. Unverified digital loan apps that search for personal information such as bank account numbers, credit card PINs, or addresses should be avoided.
Look for more than lower interest rates
Besides interest rates, other additional factors must be taken into account. You should avoid apps that have a lot of prepayment, processing, or pre-closing fees.