NEW DELHI: In an effort to curb menace of illegal loan apps, finance minister Nirmala Sitharaman has directed the Reserve Bank of India (RBI) to prepare a ‘whitelist’ of legal loan apps. She held a high-level meeting on Thursday to discuss various issues related to these apps outside the regular banking channel.
The Ministry of Electronics and Information Technology (MeitY) has been instructed to ensure that only the “whitelist” apps are hosted on the app stores.
Meanwhile, the RBI will monitor the mule/rented accounts that may be used for money laundering and to review/cancel dormant non-banking financial companies (NBFCs) to avoid their misuse.
“RBI will ensure that registration of payment aggregators is completed within a timeframe and no unregistered payment aggregator be allowed to function after that,” a government statement said.
It further added that the Ministry of Corporate Affairs (MCA) will identify shell firms and deregister them to prevent their misuse.
The minister asked the relevant ministries to create cyber awareness for customers, bank employees, law enforcement agencies and other stakeholders. The above decisions were taken after several complaints of blackmailing and criminal intimidation surfaced in the media against these apps.
In the meeting, the she also noted the possibility of money laundering, tax evasions, breach/privacy of data and misuse of unregulated payment aggregators, shell companies, defunct NBFCs etc for perpetrating such actions.
As per an RBI estimate, there were over 1,100 loan apps available for Indian Android users across 80 application stores (till last year) and of these as many as 600 were illegal apps. The Enforcement Directorate is believed to be investigating over 300 of them.
“Issues from illegal apps have been concerning and it is great to see action at the highest level of the government to address them. A concerted multi-stakeholder approach, holistically hitting every nook of the problem will pave the way for a robust and safe digital lending ecosystem,” Sugandha Saxena, CEO, Fintech Association for Consumer Empowerment said.