The Bombay High Court has directed the Reserve Bank of India and the Union Government to examine the necessity of a regulatory framework that clearly distinguishes between permissible debt-management assistance and misleading campaigns promising loan waivers. According to LiveLaw, a Division Bench comprising Justice Bharati Dangre and Justice Ashish S. Chavan observed that a clear demarcation is essential to separate legitimate borrower assistance from prohibited activities. The court ordered a report on this issue to guide future actions.
The bench heard a writ petition filed by Bajaj Finance Ltd. concerning private entities offering Debt Management Plans and loan settlements. The Union Government filed an affidavit detailing the work of the Indian Cyber Crime Coordination Centre regarding illegal digital lending apps. However, LiveLaw reported that the bench noted this did not adequately address specific concerns about entities advertising Debt Management Plans that promise loan extinguishment.
Several entities filed affidavits stating they merely assist consumers in securing loans or restructuring debts, claiming the ultimate decision rests with the lending bank. They argue they provide hand-holding assistance without direct assurances. The court observed, however, that some advertisements claim borrowers will not have to repay loans at all. The bench emphasized that targeting such operators is crucial and that a mechanism must be developed to clearly demarcate permissible advertising limits from prohibited activities.
The court remarked that it is necessary to identify what intermediaries can legitimately advertise. LiveLaw reported the court’s observation that a clear demarcation is required, noting the current affidavit lacks any such plan. The bench stated it intends to develop a mechanism segregating activities permissible under RBI regulations from prohibited ones, ensuring advertisements do not cross into misleading territory.
Pending the report, the court directed no action against Respondent Nos. 6, 7, and 10. The matter is posted for December 8, 2026, with the report due by December 5, 2026. Copies must be served in advance. The court emphasized the report should precede any criminal liability, ensuring permissible and prohibited activities are clearly defined first. The case is titled Bajaj Finance Ltd. v. Union of India.