The digital lending NBFC PC Financial Services’ Certificate of Registration has been scrapped by Reserve Bank of India on Thursday, as the former was found to violate the central bank’s guidelines regarding the line of business.
RBI Cancels PC Financial’s Certificate of Registration
The digital lender was found to violate RBI’s regulatory directions on outsourcing and KYC (Know Your Customer) guidelines.
The central bank also found the digital NBFC to be charging its borrowers with ‘usurious rate of interest and other charges in an opaque manner’.
The company has also been found using unauthorised logos of Central Bureau of Investigation and RBI on its platform, to recover loans from borrowers.
The New Delhi-based PC Financial Services is primarily in the business of extending digital loans through the ‘Cashbean’ application.
The CoR of the company has been cancelled on account of supervisory concerns, like gross violations of RBI directions, states a news report.
Details of PC Financial’s Unfair Digital Lending Practices
In consequence of charging exorbitant rates on loans provided to borrowers, and illegally using the logos of CBI and RBI to receiver the loans, the central bank has canceled PC Financial’s license
Canceling the Certificate of Registration is a major action taken against digital lenders like PC Financial Services.
In early Feb 2022, the Enforcement Directorate had gotten hold of Rs 288 crore worth of funds from PC Financial, in measures taken to investigate the legality of growing digital lending companies in India.
In Nov 2021, RBI set up a working group to keep a check on the the working of growing digital lenders in the country, setting a nodal agency for verification of the same.
After verifications it was found that out of 1,100 digital loan providing applications in the country, almost 50% of them, or 600 in exact were illegal.