The Reserve Bank of India (RBI) announced on Tuesday that it has cancelled the Certificate of Registration (CoR) of X10 Financial Services Ltd., a Mumbai-based non-banking financial company (NBFC). The action was taken in response to significant anomalies in the business's digital lending operations, specifically its failure to follow RBI regulations.
RBI Cancels Registration of X10 Financial Services, Mumbai-Based NBFC
Mumbai-based X10 Financial Services’ RBI registration was cancelled for non-compliance with operational guidelines
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Non-Compliance with Regulatory Guidelines
According to PTI, the RBI emphasized that X10 Financial Services violated its code of conduct by outsourcing crucial functions in its digital lending operations to third-party service providers (SPs). These functions included credit appraisal, interest rate determination, and Know Your Customer (KYC) verification, which should have been handled by the company itself. Also, X10 Financial Services did not perform the required due diligence on these service providers, which is required under the regulatory framework of the RBI.
Service Providers Involved
The NBFC was providing loans through several service providers using mobile applications. According to a report by PTI, these providers included Wecash Technology, XNP Technology, Yarlung Technology, Xinrui International, Omelette Technology, Mad-Elephant Network Technology, and Huidatech Technology. These platforms facilitated the company’s digital lending operations but also became the source of non-compliance that led to the RBI’s action.
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X10 Financial Services Ltd. has been operating as an NBFC since receiving its registration in June 2015. However, the company’s practices in outsourcing and its lack of oversight over service providers drew regulatory scrutiny. The cancellation of its registration now bars the company from conducting any NBFC-related activities.
The RBI's move demonstrates its commitment to maintaining compliance in the online lending industry. The RBI aims to ensure consumer protection, security, and openness in financial operations by taking action against firms such as X10 Financial Services. It also acts as a reminder to other NBFCs to adhere to legal requirements and keep appropriate control over services that are outsourced.
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