DIGITAL LENDING PLATFORMS IN INDIA AND DEBT-INDUCED SUICIDES: A SOCIO-LEGAL ANALYSIS OF REGULATORY GAPS, LIABILITY, AND CONSUMER PROTECTION
AUTHOR -SHRUTI PRAJAPATI* & TAPAN KUMAR CHANDOLA**
* STUDENT AT AMITY LAW SCHOOL LUCKNOW, AMITY UNIVERSITY UTTAR PRADESH LUCKNOW CAMPUS
** ASSISTANT PROFESSOR OF LAW AT AMITY LAW SCHOOL LUCKNOW, AMITY UNIVERSITY UTTAR PRADESH LUCKNOW CAMPUS
BEST CITATION – SHRUTI PRAJAPATI & TAPAN KUMAR CHANDOLA, DIGITAL LENDING PLATFORMS IN INDIA AND DEBT-INDUCED SUICIDES: A SOCIO-LEGAL ANALYSIS OF REGULATORY GAPS, LIABILITY, AND CONSUMER PROTECTION, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (4) OF 2026, PG. 426-434, APIS – 3920 – 0001 & ISSN – 2583-2344.
ABSTRACT
Exponential growth in digital financial platforms in India has revolutionized the traditional credit market by providing instant and collateral-free loans to the masses. These financial platforms, driven by financial technology, have achieved financial inclusion by filling the gaps in traditional banking institutions. But the unregulated and rapid growth of these platforms has also raised critical socio-legal issues regarding exploitative lending, violations of data privacy, recovery of loans, and the rising number of debt-related suicides.
This paper seeks to provide an in-depth socio-legal analysis of digital lending platforms in India, with a focus on the interplay between inadequate regulations, platform liability, and inadequate consumer protection. The paper will examine the extant legal regime, including the extant regulatory guidelines issued by the Reserve Bank of India, the Information Technology Act of 2000, the Consumer Protection Act of 2019, and the emerging data protection regime. The paper will also highlight the inadequate and piecemeal nature of the extant legal regime in tackling the issues in digital lending platforms.
Moreover, the paper delves into the psychological and sociological aspects of debt-related suicides, focusing on the aggressive recovery mechanisms and online harassment. The paper further discusses the difficulties encountered by courts in holding online lending platforms civilly and criminally liable, considering their hybrid nature of operation.
The paper concludes by calling for a robust and cohesive regulatory framework that balances innovation with accountability. The authors highlight the need for more effective consumer protection mechanisms, data privacy, and ethical lending practices, not only to avoid further socio-economic consequences but also to uphold the dignity and rights of borrowers.