Operation Hafta Vasooli- Know What RBI crackdowns on lending apps

The campaign – Hafta Vasooli was boosted for unfair lending practices by digital lending platforms. Zee business carried out the sting operation, in order to gain more influence over illegal lending practices. The purpose of launching this campaign was to protect innocent borrowers who had been harassed or even abused.

SingleDebt has always attempted to deal with illegal and inappropriate harassment calls from the recovery agents. Through this operation, the Reserve Bank of India’s attention was drawn, and harsh enforcement steps were taken. Due to the impact of this campaign highlighted by Market Guru, banking regulators have now set up a committee to deliberate on regulation in this sector. Market leaders praised RBI for taking this step.

The sting operation was planned with the interests of the people who were in debt. The pandemic was the main reason where people were forced to stay indoors and struggle to achieve their daily expense. Due to loss of Jobs, many were affected with financial crises. So, to fulfill such goals, in the month of April the scheme of borrowing money came to everyone’s eye. Many people were unable to make the payment on time.

This is where the recovery agents also called as collection agents or creditors started to pressurize people to repay their loans. Not only this, but they also hacked customers data and publicly embarrassed them by calling their family, friends, or other employees. Even visiting the debtor’s workplace to embarrass them in front of their employer and work colleagues.

The issue was brought to light by a sting operation on Zee Business on April 18, and digital lenders began offering concessions to these people.

The RBI (Reserve Bank of India) took a note on this issue and issued a notice to these fraud companies. The notice contained the information that all banks and NBFCs lending through digital lending platforms must comply with the Fair Practice Code and outsourcing rules. In short, the complete focus was on transparency.

The complete article was examined by all the banks and NBFCs. For example, if a bank or any NBFC is offering lending through a digital lending platform, it is very necessary to mention digital lending agents on your website. Additionally, all the digital lending application companies need to inform their customers which bank or NBFC they are lending money from.

As soon as the loan has been officially approved, the customer should receive a confirmation from the associated bank or NBFC. Additionally, the notice stated that for the customer to execute the loan, a copy of the loan agreement must be provided to them. Banks and NBFCs were also asked to monitor digital lenders to prevent their customers from being unnecessarily harassed. They were also asked to inform their customers about the grievance process.

Likewise, SingleDebt has also discussed harassment and its solution to provide clients or debtors a sense of formal action in response to such harassment. The most effective method of taking action against all the creditors or recovery agents is to hire experienced creditors and debt collector harassment advocates. When creditors are made aware that an Advocate represents the debtor, they immediately cease harassing calls to avoid more violations of the Reserve Bank of India (RBI) and the Banking Code and Standards Board of India (BCSBI) guidelines.

Meanwhile, after the sting operation was conducted on all the digital lending companies and was subsequently notified by the Reserve Bank of India, there were few other serious problems that were sensed with the collection agents and these companies. These RBI instructions were taken seriously by large-scale companies, but no changes were observed by small-scale companies. They continued to torture their customers.

Zee Business raised the issue again through “Operation Hafta Vasooli Part 2” and stated that many small-scale companies continue to operate in the same way despite the RBI’s instructions.

Disclaimer

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. City Credit Management LLP is not liable for any decision arising out of the use of this information.