RBI Revokes NBFC license for violating loan disbursement protocol using financial technology applications (Fintech apps) like X10 Financial Services Ltd, WeCash Technology, XNP Technology, Yarlung Technology, Shinerui International, Mad-Elephant Network Technology, and HuidaTech Technology.
due to significant violations in its digital lending practices. This move reflects RBI’s ongoing efforts to enforce compliance and ensure ethical operations in the financial sector, particularly as the landscape of digital lending continues to evolve.
On a recent Tuesday, the RBI took decisive action against X10 Financial Services Ltd by revoking its Certificate of Registration (CoR). This decision is part of a broader initiative to ensure that financial institutions, including banks and NBFCs, operate within the framework of established guidelines and ethical standards.
The RBI’s investigation revealed that X10 Financial Services had violated the Code of Conduct guidelines specifically related to outsourcing financial services. The company outsourced essential functions such as credit evaluation, setting interest rates, and conducting Know Your Customer (KYC) checks to various third-party service providers. This lack of oversight raised serious concerns regarding the integrity and accountability of its lending operations.
X10 Financial Services was linked with several fintech applications, including WeCash Technology, XNP Technology, Yarlung Technology, Shinerui International, Mad-Elephant Network Technology, and HuidaTech Technology. The reliance on multiple platforms for loan disbursement further complicated the oversight issue, leading to regulatory breaches.
Regulatory Compliance
The revocation of the NBFC’s license highlights the RBI’s commitment to enforcing regulatory compliance in the rapidly growing digital lending sector. The central bank aims to protect consumers and maintain the stability of the financial system by ensuring that all entities adhere to ethical lending practices.
X10 Financial Services Ltd, which was previously known as Abhishek Securities Ltd, had been operating under its current registration since June 2015. Despite having several years of operation, the company’s failure to comply with regulatory guidelines ultimately led to its downfall.
Important Details & Evidence
The RBI’s decision underscores the critical importance of maintaining rigorous oversight when outsourcing financial services. By failing to ensure that third-party providers adhered to the necessary standards, X10 Financial Services put itself at risk of regulatory action. This cancellation serves as a warning to other financial entities about the consequences of neglecting compliance and ethical practices.
Final Takeaways
The revocation of X10 Financial Services Ltd’s license by the RBI serves as a crucial reminder of the importance of compliance in the financial sector, especially in the realm of digital lending. As the industry continues to grow, financial institutions must prioritize ethical practices and maintain stringent oversight of their operations. This action by the RBI not only protects consumers but also reinforces the integrity of the financial system as a whole.
