North India Statesman
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The Reserve Bank of India (RBI) has canceled the registration of non-banking financial company (NBFC) X10 Financial Services Ltd over serious irregularities related to digital loan operations. This company operated from Mumbai and provided loans through digital platforms and mobile apps.
This move by RBI has once again proved that it will not tolerate any kind of irregularities or violation of guidelines in the financial sector. Even before this, RBI has taken strict steps like imposing penalty and canceling licenses on many banks and NBFCs.
These service providers were being used for digital loans
X10 Financial Services Limited has partnered with various third-party service providers for its loan distribution. Prominent names included in these are:
- Wecash Technology
- XNP Technology
- Yarlung Technology
- Xinrui International
- Omelette Technology
- Mad-Elephant Network Technology
- Huidatech Technology
The company was operating digital loan operations through these service providers.
Violation of RBI guidelines
RBI said that X10 Financial Services Limited did not follow the guidelines prescribed for digital loan operations. Primarily, the company had outsourced the following critical functions to third-party service providers:
- Credit Appraisal: This is a key part of the loan approval process.
- Fixing of Rate of Interest: The company also took its control out of its hands.
- Know Your Customer Verification (KYC Verification): This is a mandatory process, which the company did not conduct properly.
Not only this, the company also failed to investigate the service providers and monitor their operations.
Company background and decision to cancel registration
X10 Financial Services Limited first Abhishek Securities Limited Was known as. It was issued Certificate of Registration (CoR) as an NBFC in June 2015.
However, due to the company continuously violating the guidelines and putting the interests of customers at risk, RBI has now canceled its registration. RBI has clearly stated that after cancellation of registration, this company can no longer do any type of business as NBFC.
RBI’s strict stance in digital loan sector
In view of the irregularities in the digital loan sector, the Reserve Bank has taken strict steps in the last few years. Its objective is not only to provide safe financial services to consumers but also to crack down on companies that violate transparency and regulatory standards.
This strict action by RBI in digital loan operations is an important example to maintain discipline in the financial sector and protect the interests of consumers.
Frequently asked questions
Why did RBI take action against X10 Financial Services Limited?
RBI took action against the company due to irregularities in digital loan operations and violation of guidelines through third-party service providers.
Can X10 Financial Services Limited give loans now?
No, after cancellation of registration this company can no longer do business as NBFC.
In which areas did RBI find irregularities?
RBI found irregularities in critical functions like credit appraisal, interest rate determination and ‘Know Your Customer’ verification.
What are the RBI guidelines in digital loan operations?
RBI guidelines include transparent loan process, proper verification of customers and protection of consumer interests.
Is this action a warning to other NBFCs?
Yes, this action is a clear message to all NBFCs to follow the RBI guidelines and give priority to the interests of consumers.
What could be the next step of RBI?
RBI is continuously monitoring the digital loan sector and is likely to take strict action on other irregularities as well.
