New Delhi, Sep 22 (SocialNews.XYZ) The Reserve Bank of India (RBI) on Monday cancelled the certificate of registration (CoR) of New Delhi-based Datta Finance and Trading Private Limited after finding irregularities in its digital lending operations.
In its statement, the central bank said the non-banking financial company (NBFC) had violated guidelines related to outsourcing of financial services.
“The CoR has been cancelled by the RBI as the NBFC has violated guidelines on code of conduct in outsourcing of financial services in its digital lending operations,” RBI said in a statement.
The company was found outsourcing its core decision-making functions to service providers, which goes against RBI rules.
“The company violated the norms by outsourcing its core decision-making functions such as sourcing of customers, conducting their due diligence, disbursement of loans, servicing of loans, recovery of loans granted as well as KYC verification to the service provider,” the central bank added.
Datta Finance had allowed third-party apps like KinCash and DoLoan (operated by Zest Top One Technology Private Limited) and its own in-house app ZestCash to handle key functions.
“These included sourcing customers, carrying out due diligence, disbursing loans, servicing and recovering loans, and even conducting KYC verification,” it added.
The RBI noted that outsourcing such critical activities violates the prescribed code of conduct for digital lending.
With the cancellation of its registration, Datta Finance and Trading Private Limited will no longer be allowed to carry out business as a non-banking financial institution (NBFI), the RBI said.
Meanwhile, earlier this year, the central bank cancelled the licence of The Karwar Urban Co-operative Bank Ltd in Karnataka as it does not have adequate capital and earning prospects.
“The Karwar Urban Co-operative Bank Ltd., Karwar, is prohibited from conducting the business of ‘banking’ which includes, among other things, acceptance of deposits and repayment of deposits with immediate effect,” the RBI order stated in July.
Source: IANS
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