Mumbai. The Reserve Bank of India (RBI) has cancelled the registration certificates of two non-banking financial companies (NBFCs) – Star Finserv India and Polytex India – due to irregular lending practices.
The central bank gave this information. Hyderabad-based Star Finserv India was providing services under ‘Progcap’ (owned and operated by Desiderata Impact Ventures Private Limited). Mumbai-headquartered Polytex India was providing services under the ‘Z2P’ mobile application (owned and operated by Zytech Technologies Private Limited).
Why did RBI cancel the license
Giving reasons for cancellation of Star Finserv’s Certificate of Registration (COR), the Reserve Bank said that the company has violated the Code of Conduct Guidelines in Outsourcing Financial Services in its Digital Lending Operations by outsourcing its key decision-making functions, such as loan appraisal, loan approval as well as KYC verification process to the service provider. The Reserve Bank said that Star Finserv has violated the Reserve Bank’s guidelines on data privacy and security of customer information by providing full access to customer details to the service provider.
Polytex has violated the norms of Code of Conduct in Outsourcing of Financial Services by outsourcing its key decision making functions relating to KYC verification, credit appraisal, loan disbursement, loan recovery, follow up with borrowers and attending to and resolving borrower grievances.
