With the proliferation of lending apps, you may be able to borrow money with a few taps. However, the problem is separating genuine loan apps from fake apps. Borrowing through a fake app can subject you to hidden charges, high interest rates, data theft, and possibly blackmail, harassment, and extortion.
To safeguard borrower interest and assist them in identifying fake loan apps, RBI has released Digital Lending Directions, 2025 which consolidates RBI’s previous circulars about protecting borrowers from fake digital lenders.
Let’s look at what RBI says.
#1 Only RBI Regulated Entities Can Lend
Only the lenders regulated by the Reserve Bank are permitted to lend digitally (through mobile apps or websites) in India. This will include scheduled and commercial banks, NBFCs, and co-operative banks.
A mobile app is just an interface. It must be acting as an agent of an RBI authorized lender.
Hence, if the mobile app does not mention the underlying lender or does not provide its details, you are dealing with a fake loan app.
#2 Details of Genuine Lending Apps on the Bank Websites
Going by Point #1, any mobile app offering loans must be tied to a lender.
Further, the banks/NBFCs must disclose all Digital Lending Agents (DLA) and Lending Service Partners (LSP) on their website. This implies any app/website offering loans of, say ICICI Bank, must be displayed on ICICI Bank’s website. If you cannot find app/website offering you ICICI Bank loan products on the ICICI Bank official website, this means you are dealing with a fake loan application.
Digital Lending Agents (DLAs) are mobile applications or web applications that offer loan products from an authorized lender (banks, NBFCs, etc.). These would include apps by the lenders themselves or their agents (Lending service partners or LSP).
Lending Service Partners (LSP) are partners engaged by banks for any function of the lending cycle, including customer acquisition, servicing, and recovery. An LSP could be another RBI regulated entity too.
The banks/NBFCs must maintain on a prominent single page on their website the following details.
- Details of all digital lending products and their DLAs
- Details of the LSPs and the DLAs (mobile apps/web-based apps) of the LSPs. The banks must also mention the lending functions they have engaged an LSP for.
- Details about customer care of the lender and the grievance redressal mechanism.
- Link to RBI’s Complaint Management System (CMS) and Sachet Portal.
#3 Details of Genuine Loan Apps on RBI Website
RBI has also asked banks to collate and share details of all their DLAs and LSPs by June 15, 2025. Such details will also be shared on RBI website from July 1, 2025. Such information will be available on Centralized Information Management System (CIMS) of the RBI from July 1, 2025.
Hence, if the name of your loan app is missing from the RBI website, you are dealing with a fake loan app.
#4 Disclosure by Loan Apps
The loan app must provide a link to the lender’s (bank/NBFC) website. Hence, if there is no mention of eventual lender (bank/NBFC), you are dealing with a fake loan app.
The loan app must provide you Key Fact Statement (KFS) BEFORE the signing of the loan contract. Such KFS must be digitally signed by the end-lender (bank/NBFC). If you have not been provided with such a document before signing the loan, you are dealing with a fake app.
The Loan apps (DLAs) must also prominently display contact details of the nodal grievance redressal officers of the lender (bank/NBFC) and in the KFS provided to the borrower. While the responsibility of the grievance redressal lies with the eventual lender, the loan app (DLA) must also provide facility to lodge complaints.
The lenders are required to ensure that DLAs send the digitally signed documents (on bank’s letterhead) to the registered email and SMS of the borrower. Such documents must include KFS, summary of loan products, sanction letter, terms and conditions, account statements etc. If you don’t receive such information, you are dealing with a fake loan app.
#5 Limited Access to Information
The loan app cannot collect borrower data indiscriminately. Frankly, that’s how a lot of blackmailing and social shaming happens.
The lenders are required to ensure that any data collected by the loan app (DLA) is need-based and with prior and explicit consent of the borrower. Whether the lenders will do their job properly is another question.
The loan app shall not access (or try to access) personal information like file and media, contact list, call logs etc. The lenders are required to ensure this. In any case, if your loan app requests access to such data, you are dealing with a fake loan app.
The loan app may seek only ONE-TIME access to camera, microphone, location, or any other facility necessary for the purpose of KYC (or for on-boarding) with the explicit consent of the borrower.
Further, the loan app must seek your explicit consent before sharing your data with third parties.
#6 Mandatory Reporting to Credit Information Companies (CIBIL Etc.)
The bank/NBFCs are required to share details of loans (even offered through their LSPs or DLAs) to the credit information companies (CICs). CIBIL is the most popular CIC.
If you do not find details about your loan in your credit report, you are dealing with a fake loan app. Well, while the loan is already taken, you must refrain from any further dealings.
What Should You Do?
RBI Digital Lending Directions, 2025 are a significant step in helping borrowers differentiate between genuine and fake loan apps.
You must check the app for the following:
- Does the loan app display the name of the eventual lender and link to its website?
- Does it list the grievance redressal details?
- Does the loan app send KFS (digitally signed by the end lender) before executing loan documents?
- Do you find the name of the loan app on the bank (as claimed by the loan app) on the bank’s website?
- Do you find the name of the loan app on RBI website?
- Does the loan app ask for permission before accessing your personal information? Does the loan app limit to asking for details as mentioned in Point #5?
- Do you find the loan details in your credit report?
If the answer to any of these questions is NO, you are dealing with a fake loan app.