The recent intervention by the Delhi High Court regarding the data practices of digital lending apps highlights a critical "compliance gap" in India’s fintech ecosystem. Despite the Reserve Bank of India (Digital Lending) Directions, 2025 being in effect, a Public Interest Litigation (PIL) suggests that the regulatory "shield" designed to protect borrowers remains porous.
⚖️ Judicial Scrutiny: A Call for Accountability
The High Court’s decision to seek a formal response from the RBI marks a significant shift from passive regulation to active judicial oversight. The petition alleges that several Digital Lending Apps (DLAs) continue to operate in a "business-as-usual" mode, ignoring the stringent privacy mandates introduced last year.
The Bench has effectively asked the RBI to provide a "report card" on its enforcement. It is no longer enough to have rules on paper; the court is looking for evidence of supervisory action, such as audits, penalties, or the de-platforming of non-compliant entities.
📱 The "Named" Apps and Alleged Violations
The petition specifically points toward several widely used applications, alleging a systemic disregard for the 2025 Directions. The core of the complaint centers on three primary violations:
Unauthorized Hardware Access: The 2025 guidelines explicitly prohibit apps from scraping a borrower’s contact lists, call logs, or media files. However, the petition claims many apps still make these permissions a prerequisite for loan approval.
Coercive "Take-It-or-Leave-It" Consent: Borrowers are often presented with blanket privacy policies. If a user attempts to opt out of non-essential data collection, the loan application is frequently terminated, rendering the concept of "informed consent" illusory.
Data Proportionality: There is a growing concern that apps are collecting data that has no "reasonable nexus" to credit assessment, likely using it for aggressive debt recovery or unauthorized third-party sharing.
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