Mumbai Reserve Bank on Monday said it has canceled the registration certificates of two NBFCs, Star Finserv India and Polytex India, due to irregular lending practices.
Hyderabad-based Star Finserv India was offering the service under 'Progcap' (owned and operated by Desiderata Impact Ventures Private Limited).
Mumbai-based Polytex India was providing services through mobile application 'Z2P' (owned and operated by Zaitech Technologies Private Limited).
Giving reasons for canceling Star Finserv's Certificate of Registration (CoR), the RBI said the company has violated guidelines on code of conduct in outsourcing of financial services in its digital lending operations by outsourcing its core lending functions. decision making, such as credit evaluation. loan sanction as well as the KYC verification process for the service provider.
Star Finserv has violated RBI guidelines on data confidentiality and security of customer information by providing complete access to customer data to the service provider, the RBI said.
Polytex has violated the norms of the code of conduct in financial services outsourcing by outsourcing its core decision-making functions related to customer engagement, KYC verification, credit assessment, loan disbursement, loan recovery, monitoring of borrowers and attention and resolution of borrower complaints.
By outsourcing loan-related activities, Polytex India earned a fixed fee from its service provider, while the service provider earned interest charged to the borrower on these loans and in some cases at exorbitant rates, in violation of the Code. of Fair Practices (FPC). ) guidelines, the RBI said.
Following the cancellation of the registration certificates, the two entities "will not transact" with the business of a non-banking financial institution (NBFI), the RBI added.
Hyderabad-based Star Finserv India was offering the service under 'Progcap' (owned and operated by Desiderata Impact Ventures Private Limited).
Mumbai-based Polytex India was providing services through mobile application 'Z2P' (owned and operated by Zaitech Technologies Private Limited).
Giving reasons for canceling Star Finserv's Certificate of Registration (CoR), the RBI said the company has violated guidelines on code of conduct in outsourcing of financial services in its digital lending operations by outsourcing its core lending functions. decision making, such as credit evaluation. loan sanction as well as the KYC verification process for the service provider.
Star Finserv has violated RBI guidelines on data confidentiality and security of customer information by providing complete access to customer data to the service provider, the RBI said.
Polytex has violated the norms of the code of conduct in financial services outsourcing by outsourcing its core decision-making functions related to customer engagement, KYC verification, credit assessment, loan disbursement, loan recovery, monitoring of borrowers and attention and resolution of borrower complaints.
By outsourcing loan-related activities, Polytex India earned a fixed fee from its service provider, while the service provider earned interest charged to the borrower on these loans and in some cases at exorbitant rates, in violation of the Code. of Fair Practices (FPC). ) guidelines, the RBI said.
Following the cancellation of the registration certificates, the two entities "will not transact" with the business of a non-banking financial institution (NBFI), the RBI added.
