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The petition had filed before the Delhi High Court claiming that the digital platforms must be regulated adequately and the court issued notice to the Central Government on 15th January 2021. The Center has been ordered to file a reply within 19th February 2021.
The Reserve Bank of India had released a circular waring the central government about the unauthorized digital lending platforms, to the central government and asked the government to regulate and control the same. The said circular was released on 23-12-2020.
The petition claimed that the said online lending platforms use to charge unreasonable interest and service charges. According to the petition, there are many money lending apps which provide instant loan to the users from 1500 Rs to 30,000 Rs which is repayable within 7 to 15 days. The petition stated that even in such amounts 30% to 40% was deduced as platform fees and other administrative charges and only after such deductions the money was transferred to the user’s account.
The RBI in its circular stated that it had received many complaints about such money lending apps exploiting individuals, small business entities, and innocent citizens. According to the report, such apps were charging more interest and interest rates than what was actually prescribed under the law. The recovery methods adopted by such apps were unacceptable, the apps also misused the terms and conditions of the contract entered by users. The privacy laws were also violated by such money lenders as they access the data on the mobile phone of the users. The circular had also cautioned the public to not fall into the traps of such unscrupulous activities and verify the company before using such apps.
The government had not taken any action regarding the above concern hence the petition was instituted.
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