The Reserve Bank of India (RBI) on Monday said it has noticed certain misleading advertisements enticing borrowers by offering loan waivers.

These entities seem to be actively promoting many such campaigns in the print media as well as social media platforms, the banking regulator says in a statement.

There are reports of such entities charging a service or legal fee for issuing 'debt waiver certificates' without any authority, the central bank says.

"It has also come to our notice that in certain locations, campaigns are being run by a few persons, which undermine the efforts of Banks in enforcing their rights over the securities charged to the Banks," the Reserve Bank says.

"Such entities are misrepresenting that dues to financial institutions including banks need not be repaid. Such activities undermine the stability of financial institutions and, above all, the interest of the depositors. It may also be noted that associating with such entities can result in direct financial losses," the RBI warns.

Members of the public are cautioned not to fall prey to such false and misleading campaigns and report such incidents to law enforcement agencies, it says.

These directions come days after RBI governor Shaktikanta Das said the extant guidelines on connected lending — when someone misuses their influence to secure a loan from a bank — are limited in scope.

"It has been decided to come out with a unified regulatory framework on connected lending for all regulated entities of the Reserve Bank. This will further strengthen the pricing and management of credit by regulated entities," Das said in a statement after the monetary policy announcement.

Meanwhile, unsecured lending in India has grown at about 24-25% year-on-year as compared to 12-14% growth in other lending. Reserve Bank of India (RBI) deputy governor Swaminathan Janakiraman last week said the hike in risk weights on consumer lending is to end any sort of exuberance that may be exhibited by certain lenders. "It is a pre-emptive measure to bring certain prudence and to bring an end to any sort of exuberance that may be exhibited by certain lenders. Efforts were made over the past three-four months by way of sensitising the players to put adequate internal control measures to ensure that the risk build-up is avoided," Swaminathan said in a press conference after the monetary policy meeting.

“As the market was not responding enough to that, there was a necessity that we watch the data and based on that data, we have taken certain prudential measures that the regulated entities have to put in place,” he said.

“Any business model that is likely to throw up enhanced risk is curtailed. It is not to curtail growth. We have taken steps to exclude growth drivers like home loans, vehicle loans, etc,” he said.

debt waiver certificate

RBI cautions against unauthorised campaigns on loan waiver