Mumbai, Jul 8 (PTI) The Reserve Bank on Monday said it has cancelled the certificates of registration of two NBFCs -- Star Finserv India and Polytex India -- due to irregular lending practices.

Hyderabad-based Star Finserv India was offering the service under 'Progcap' (owned and operated by Desiderata Impact Ventures Private Limited).

Also Read | How To Survive a Stampede? Essential Skills and Key Survival Tips for Protecting Yourself in a Crowd (Watch Videos).

Polytex India, headquartered in Mumbai, was providing services under the 'Z2P' mobile application (owned and operated by Zaitech Technologies Private Limited).

Giving reasons for cancelling the Certificate of Registration (CoR) of Star Finserv, RBI said the company has violated guidelines on the code of conduct in outsourcing financial services in its digital lending operations by outsourcing its core decision-making functions, such as credit appraisal, loan sanctioning as well as KYC verification process to the service provider.

Also Read | Shillong Teer Results Today, July 08 2024: Know Winning Numbers, Result Chart for Shillong Morning Teer, Shillong Night Teer, Khanapara Teer, Juwai Teer and Jowai Ladrymbai.

Star Finserv has violated RBI guidelines on data confidentiality and security of customer information by providing complete access to customer data to the service provider, the RBI said.

Polytex has violated norms on the code of conduct in outsourcing of financial services by outsourcing its core decision-making functions related to client sourcing, KYC verification, credit appraisal, loan disbursal, loan recovery, follow-up with borrowers and attending and resolving complaints from borrowers.

While outsourcing the activities related to lending, Polytex India earned a fixed fee from its service provider, whereas the service provider earned the interest charged to the borrower on these loans and in some cases, at exorbitant rates in violation of the Fair Practice Code (FPC) guidelines, RBI said.

Following the cancellation of registration certificates, the two entities "shall not transact" the business of a non-banking financial institution (NBFI), the RBI added.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)