Finance Minister Nirmala Sitharaman discussed several issues related to illegal loan apps in a meeting and decided to take a large number of measures to monitor the operation of such apps amid increasing cases of digital fraud.
Most digital lending apps are not registered with the central bank and work on their own. There have been increasing cases of alleged borrower suicides as a result of intimidation by some operators of digital lending apps.
The meeting, chaired by the minister, took place on Thursday and it was decided that RBI will prepare a whitelist of all legal apps and that the Ministry of Electronics and Information Technology (MeitY) will ensure that only those are hosted in app stores.
The RBI will oversee the ‘mule/rented’ accounts that can be used for money laundering and to review/cancel dormant NBFCs to prevent abuse.
The central bank will also ensure that the registration of payment aggregators is completed within a time frame and that no unregistered payment aggregators are allowed to operate after that, the Treasury Department said in a statement on Friday.
As part of measures to control the distribution of such apps, the Ministry of Business Affairs (MCA) will identify and unsubscribe empty companies to prevent abuse.
In addition, steps should be taken to increase cyber awareness of customers, bank employees, law enforcement and other stakeholders about these apps.
All ministries or agencies have been asked to take all possible actions to prevent the operation of such apps.
During the meeting, the Minister of Finance expressed his concern about the increasing number of illegal loan apps offering loans/micro-credits, especially to vulnerable groups and low-income people at exorbitant interest rates and processing/hidden costs, and predatory recovery practices with blackmail, criminal intimidation, etc.
Sitharaman also pointed to the possibility of money laundering, tax evasion, data breach/privacy and misuse of unregulated payment aggregators, shell companies, defunct NBFCs etc. for committing such actions, it said.
The meeting was attended by the Secretary of Finance, the Secretary of Economic Affairs, the Secretary of the Tax Administration, who also has the additional responsibility of the Secretary of the Financial Services of Corporate Affairs and the Secretary of MeitY, the Deputy Governor and Executive director of RBI, RBI. PTI DP DP ANU ANU