125% interest rate on loans? RBI, Sebi dragged to court over Paisalo's charge

Mar 12, 2024

The Delhi High Court has sought responses from RBI and SEBI on a petition probing alleged unfair lending by Paisalo Digital.

The court action follows accusations that the NBFC was charging a 125% interest rate per annum on loans.

In the plea alleging exorbitant interest rates, the petitioner said an outstanding loan of Rs 15.9 crore in May 2019 escalated to Rs 23 crore in June 2019.

Sebi in its argument said it "doesn't regulate NBFCs' lending practices, emphasising role as a market regulator, especially in the securities market".

Paisalo has been given time till 4 weeks to frame a reply. The case hearing is on August 8.

Paisalo Digital has said "there is no specific order from the Hon'ble High Court directing any regulator to investigate any unfair lending practices".

The matter, the NBFC said in a clarification, pertains to Sat Priya Mehamia Memorial Educational Trust, Rohtak, involving a borrowed amount of Rs 12 crore on March 24, 2018, that prompted it to take legal action against the defaulter and its office bearers involved in selling off the 'land mortgaged to us'.

"Despite our efforts and the Hon’ble High Court of Delhi's order dated 25th January 2024 directing the maintenance of the status-quo as to the title and possession of the mortgaged properties, the defaulter and its office bearers continue to violate these orders by illegally disposing of the mortgaged properties. The company treated this as a loss asset in September 2019 in its books of accounts by providing 100%," Agarwal said.

[Business Today]