Listed fintech startup MobiKwik has come under scrutiny once again – this time for allegedly cheating investors and misusing their funds. This was revealed in First Information Reports (FIRs) registered against the company and Lendbox, its peer-to-peer (P2P) lending partner for an investment product called MobiKwik Xtra. MediaNama has reviewed the copies of the FIRs.
What are the allegations? As per the police, MobiKwik and Lendbox assured investors of fixed deposit (FD)-like returns and easy withdrawals, but later diverted funds to new borrowers and blocked withdrawals without investors’ consent.
- In one FIR filed at the Varthur police station in Bengaluru on May 14, investor Arjeet Singh Benchhor alleged he invested Rs 4 lakh in the MobiKwik Xtra scheme, but the funds remain stuck, and withdrawals restricted.
- He cited a Borrower Mapping report dated May 5 and lender verification findings, according to which several borrower accounts linked to the scheme had become inactive or defaulted.
- According to the complainant, more than 630 investors across the country have collectively pumped in about Rs 6 crore in the scheme. He has sought freezing of the companies’ bank accounts and legal action against those responsible.
- In another complaint, investor Mayank Dey alleges that he invested Rs 3 lakh through MobiKwik and Lendbox, out of which Rs 91,341 remains blocked. He further claimed that the companies endorsed the scheme as an FD-like investment product but later blocked withdrawals without the investors’ consent.
The contents of the FIR were translated from Kannada to English using Google Translate.
Why this matters: The Reserve Bank of India’s (RBI) guidelines for non-banking finance company (NBFC)-P2P lending platforms prohibit intermediaries from promoting P2P lending as investment products with features such as tenure-linked assured minimum returns, liquidity options, and, at times, acting as a deposit taker and lender rather than a platform.
However, MobiKwik and Lendbox appear to be doing just that. The official website shows that the companies have been luring investors with a 10-14% return per year, offering up to Rs 14,000 for every Rs 1 lakh invested in MobiKwik Xtra.
Why has the RBI not taken any action against the companies so far?
Concerns around consent: The complaints allege that MobiKwik and Lendbox diverted investor funds to new borrowers without consent, many of whom defaulted. Under India’s Digital Personal Data Protection (DPDP) Act, 2023, consent is required to be specific, informed, and purpose-bound. Were the investors explicitly told to whom and under what risk profile their money would be lent, or were they asked for a blanket, vague consent at the time of onboarding? Were the investors told exactly how their personal data, including credit history and transaction behaviour, was being used?
Rerouting investor funds to new borrowers is a regulatory breach, not a data protection violation. However, if MobiKwik processed, shared or analysed that data for facilitating unauthorised lending arrangements, then it violated the purpose limitation principle, as data was used for a different purpose than originally consented to.
What is MobiKwik saying? Responding to MediaNama queries on the development, MobiKwik said in a statement that the P2P lending product Xtra was offered by Lendbox, with the former solely acting as a distribution partner.
“As a P2P lending product, customers were aware of the product structure, associated risks, and Terms & Conditions prior to their participation in the product. Modifications in the product, subsequent to regulatory changes introduced in August 2024, led to revised repayment schedules—all of which were communicated promptly to users through proper support channels,” the company said.
Citing data available with Lendbox, the fintech firm stated that more than 90% in aggregate has been repaid by borrowers to respective lenders. The balance is currently with borrowers, with the recovery and repayment process underway.
MobiKwik further added that it is actively working with Lendbox to resolve customer disputes and fully cooperates with authorities wherever required.
NBFC licence while under scrutiny: The customer complaints filed in Bengaluru come on the heels of MobiKwik receiving an NBFC licence from the RBI, which will allow the company to give loans directly to customers rather than depending on banks and other NBFCs. Did the RBI’s decision to grant the NBFC licence take into account the pending complaints about unauthorised fund diversion?
This is not the first time MobiKwik has come under fire from users. In September last year, the fintech firm froze over 2,000 merchant accounts after a technical glitch, apparently introduced in a software update, led to fraudulent transactions exceeding Rs 40 crore. At the time, merchants complained that they had to face the brunt of MobiKwik’s fault.
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