Delhi HC asks RBI if digital lending apps violate data protection of borrowers

The Delhi High Court has sought a reply from the Reserve Bank of India (RBI) on whether non-banking financial corporations violate the right of protection of borrowers’ data through digital lending apps.

The court asked the RBI to file a counter affidavit in relation to the writ petition that has raised concerns about violation of the right to protection of data. It also asked the RBI to put on record the measures taken for the enforcement of the ‘RBI Digital Lending Directions 2025’ guidelines.

The Delhi High Court said that the counter would also dispose as to what action has been taken by concerned entities in case any violations of the said directions are found.

The court asked the RBI to file the affidavit in six weeks’ time.

The 2025 guidelines that provide certain measures to check the proliferation of data of borrows as well as mechanism for grievance redressal are applicable to all digital lending activities of private and public banks.

Meanwhile, India's digital lending ecosystem is growing rapidly, with digital NBFCs now playing a key role in the personal loan market. According to the Digital Personal Loans Market Report for H1 FY25–26 by the Fintech Association for Consumer Empowerment (FACE), 6.4 crore digital personal loans were sanctioned in the first half of the fiscal year. The total value of these loans amounted to Rs 97,381 crore. This accounts for 80 per cent of all personal loan volumes and 19 per cent of the total sanctioned value, highlighting the increasing significance of the digital lending sector in India.