RBI cancels registration certificate of app-based lender PC Financial Services

The Reserve Bank of India (RBI) announced on Thursday that it has cancelled the Certificate of Registration (CoR) issued to P C Financial Services Private Limited. P C Financial Services Private Limited is primarily engaged in mobile app-based lending operations through an app called 'Cashbean'

The CoR of the company has been cancelled on account of supervisory concerns such as gross violations of RBI directions on outsourcing and Know Your Customer (KYC) norms, the top bank said in a statement.

"In exercise of the powers conferred under Section 45-IA (6) (iv) of the Reserve Bank of India Act, 1934, the Reserve Bank has cancelled the Certificate of Registration (CoR) issued to M/s P C Financial Services Private Limited, New Delhi," wrote RBI in the official notification. 

It added that "P C Financial Services Private Limited shall not transact the business of a Non-Banking Financial Institution (NBFI), as defined in clause (a) of Section 45-I of the RBI Act, 1934" 

RBI further explained that the firm was also found to be charging usurious rate of interest and other charges to its borrowers in an opaque manner. The company was also indulging in unauthorized use of logos of Reserve Bank and Central Bureau of Investigation for recovery from the borrowers in gross violation of the Fair Practices Code.

In November, the RBI Working Group on digital lending had stated that there it had discovered 600 illegal loan apps operating in India. The sudden mushrooming of digital lending apps and other modes had forced RBI to look at the entire ecosystem of lending which included banks, NBFCs, technology companies and other entities. 

The RBI appointed working group had recommended certain suggestions for customer protection. These included subjecting the digital lending apps to a verification process by a nodal agency to be setup in consultation with stakeholders; setting up of a Self-Regulatory Organisation (SRO) covering the participants in the digital lending ecosystem;  introducing separate legislation to prevent illegal digital lending activities; among others. 

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