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 and blocked withdrawals without 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 appears to be doing just that. The official website shows that the company has been luring investors with a 10-14% annual return, 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 borrowers, 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? Are investors clearly told at the time of consent exactly what their personal and financial data will be used for?
If the investor has not consented to lend money to a specific borrower, and the platforms are reallocating the funds unilaterally, it violates the purpose limitation principle of India’s data protection law.
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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