Online lenders cannot be allowed to charge ‘exorbitant’ rates: Delhi HC
DELHI High Court said on Tuesday that digital lending platforms cannot be allowed to charge an “exorbitant” rate of interest and observed that it expects the Center and the Reserve Bank of India to offer something to fix the interest rate.
“Don’t allow all these things. You are also the guardian of the interests of a little man,” said the divisional bench of Chief Justice DN Patel and Justice Jyoti Singh during the registration of a PIL, asking for the regulation of online digital lenders, for a hearing on August 27.
The petition filed by Dharanidhar Karimojji, a digital marketing freelancer, through lawyer Prashant Bhushan, calls for the fixing of the maximum interest rate chargeable by online digital sellers and the establishment of a remedy in grievance cases for borrowers in each state. He alleges that online lending platforms offer instant loans but deduct almost 35-45% of the loan money as platform fees, service fees and other pretexts.
The RBI told the court that the Center should issue a regulation. “We regulate banks and non-bank financial companies. These online lending platforms are different,” he told the court.
The court said the interest rate cannot be exorbitant. The bench also told the Center that they should “act quickly in this matter”. “RBI can’t say ‘I don’t have credentials’. The interest rate you need to finalize,” he said.