RBI cancels CoR of 2 NBFCs for irregular lending prosess

Mumbai: The RBI on Monday said it has cancelled the certificates of registration (CoR) of two NBFCs due to irregular lending practices.

Hyderabad-based Star Finserv India was offering the service under ‘Progcap’ (owned and operated by Desiderata Impact Ventures Pvt Ltd).

Polytex India, headquartered in Mumbai, was providing services under the ‘Z2P’ mobile application (owned and operated by Zaitech Technologies Pvt Ltd).

RBI said Star Finserv has violated guidelines on the code of conduct in outsourcing financial services in its digital lending operations by outsourcing its core decision-making functions, such as credit appraisal, loan sanctioning as well as KYC verification process to the service provider. The company has violated RBI guidelines on data confidentiality and security of customer information by providing complete access to customer data to the service provider.

Polytex has violated norms on the code of conduct in outsourcing of financial services by outsourcing its core decision-making functions related to client sourcing, KYC verification, credit appraisal, loan disbursal, loan recovery, follow-up with borrowers and attending and resolving complaints from borrowers.