The Delhi High Court has sought a response from the Reserve Bank of India on a PIL alleging that NBFCs and digital lending apps breach borrowers’ privacy, asking RBI to clarify enforcement of its 2025 Digital Lending Directions effectively.
NEW DELHI: The Delhi High Court requested a response from the Reserve Bank of India (RBI) regarding a Public Interest Litigation (PIL) that claims Non-banking financial corporations (NBFCs) and their digital lending mobile applications are violating borrowers’ privacy rights.
A bench led by Chief Justice Devendra Kumar Upadhyaya and Justice Tejas Karia directed the RBI to submit its response clarifying the actions taken to enforce the RBI Digital Lending Directions of 2025.
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The petitioner argued that, despite the issuance of the 2025 guidelines, numerous mobile applications on platforms such as the Google Play Store and Apple App Store continue to access contact lists and call logs, collect personal data, and employ coercive consent mechanisms.
The Court stated,
“We require the RBI to file a counter affidavit, not only in relation to this petition, but also bringing on record the action taken for enforcement of 2025 guidelines. The counter shall also dispose as to what action has been taken by the concerned entities in case any violation of the said directions are found,”
The court ordered that the affidavit be filed within six weeks.
The bench acknowledged that the RBI had issued statutory guidelines for digital lending activities in India, which include measures for controlling data proliferation and establishing a grievance redressal mechanism.
The petitioner had previously filed a complaint with the RBI but received no response or action. It was claimed that the RBI’s inaction on the complaint allowed these violations to persist, constituting a failure to fulfill its statutory and constitutional responsibilities.
A 22 year old college student studying Political Science Honours therefore sought urgent intervention from the court.
The petition states that
.“The continued violations have resulted in large-scale invasion of borrower privacy, particularly affecting students, first-time borrowers, gig workers, and economically vulnerable sections of society…The violations disproportionately affect digitally dependent and economically weaker sections, resulting in unequal protection and denial of safeguards guaranteed under Article 14,”
The PIL requested directives to the Union Ministry of Finance, RBI, Google LLC, and Apple India.
Additionally, it called for the RBI to cancel or suspend the licenses of non compliant NBFCs, digital lending applications, lending service providers, and other related entities. The PIL also sought a status report detailing the number of non compliant digital lending platforms and the actions taken against them.
Regarding applications on the Play Store and App Store, the petitioner asked for the suspension or delisting of all digital lending applications that are operating without RBI registration or failing to comply with RBI guidelines.
The next hearing is scheduled for April 1.
Advocates Kunal Madan, Manmay Sarawagi, Yugal Jain and Teena appeared for the petitioner
Case Title: Himakshi Bhargav v. Union Of India & Ors.