The Madras High Court issued a notification to the central and state governments, Google, RBI and other such institutions regarding the spike in cases of online money lending which takes place at high interest via mobile apps.
The bench comprising Justice M M Sundaresh and Justice S. Anandi observed that foreign money was being circulated without the permission of the RBI.
The bench further remarked that the methods of recovering the loans represent a sorry state of affairs.
The Public Interest Litigation was filed by S Muthu Kumar, a lawyer, who submitted in his application that people were falling prey to online loan lending apps that were charging a higher rate of interest without the approval of the Reserve Bank of India.
There was also an absence of background verification regarding the RBI approvals on the Google play store.
Advocate A. Kannan, representing the petitioners stated that the advertisement of the apps was appearing while using smartphones thereby instigating users to avail the facility of using instant loans through these apps.
He further mentioned the debtors that fails to repay the loan within the time limit were prey to continuous verbal and physical abuse which thereby drives the debtor to end their life.
The PIL specifically stated that,
“The recovery teams of such instant money lenders are insulting the debtor by circulating their picture in WhatsApp groups showing them as a “defaulter” which is nothing but infringing the rights of privacy and dignity as enshrined in the Constitution of India.”
The PIL was filed in the court to sought direction and pass a notification restraining Google from allowing online money lending apps to charge higher interest rates without permission from the RBI.
It further sought the intervention of the government authorities to take a step to ban the instant loan apps available.
It also asked for the appointment of a special team to investigate the companies that are providing money digitally.
The case is expected to be listed on 3rd February.