Blog: [The Viewpoint] RBI’s regulation of interest rates and penal charges: Next financial regulatory hot topic in India? [Part II] – Bar & Bench – Indian Legal News

For the assistance of banks, NBFCs and fintech companies who may be apprehensive about action under this notification, we list down the key reasons on the basis of which the bans and show-cause notices are issued:

  • If the application/website communicates to servers located in hostile countries. (The IP/domains where the application is connecting are reportedly involved in suspicious and malicious activities)

  • The application/website is functioning in a non-transparent method, collecting exorbitant interest rates, threatening.

  • Collections malpractice: harassing, threatening, and putting down late-paying customers.

  • Data security concerns include contentions that data may be sold, transferred, or disclosed to fraudulent parties.

  • User complaints: harassing using their unauthorised personal information.

  • Applications that are not on RBI’s whitelist may be prohibited because they are regarded to be illegal.

  • Contentions of some loan operations being carried out using shell firms.

  • Authorization: without RBI’s direct oversight, numerous applications may function in legal limbo.

  • Applications using/renting licences from inactive NBFCs to conduct lending operations are known as “licence mulling.”

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