Mumbai: The Bombay High Court has called upon the Reserve Bank of India (RBI) and the Union government to examine the need for a regulatory framework to distinguish permissible debt-management assistance from misleading campaigns promising borrowers that their loans can be waived or extinguished, reports legal portal LiveLaw. The court observed that a clear demarcation was necessary between legitimate assistance to borrowers and prohibited activities, and directed that a report examining the issue be placed before it.
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The court was hearing a writ petition filed by Bajaj Finance Ltd concerning campaigns by certain private entities offering debt management plans, loan settlements, foreclosures and legal services to borrowers.
The court considered an affidavit by the Union government referring to the work undertaken by the Indian Cyber Crime Coordination Centre (I4C) and the National Cyber Crime Reporting Portal. The affidavit primarily addressed illegal digital lending applications, including those allegedly charging excessive processing fees and exorbitant interest, misusing borrowers' personal data and resorting to harassment and coercive recovery practices.
The court noted that the affidavit did not adequately address the specific concern raised in the petition regarding entities advertising debt management plans and promising loan settlements. The court noted that certain entities had filed affidavits explaining that they merely assisted consumers in securing loans, while the ultimate decision rested with the lending bank.
They claimed to provide hand-holding assistance without giving borrowers any direct assurance.
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