To curb the threat of illegal lending apps, the Reserve Bank of India (RBI) has been asked to create a “whitelist” of legitimate lending apps, and the Ministry of Electronics and Information Technology (MEITY) is tasked with ensuring that only such permitted apps are available on available in the app store.
Finance Minister Nirmala Sitharaman on Thursday held a meeting with senior officials from RBI, MEITY and the ministries of finance and corporate affairs, urging all ministries and agencies to “take all possible measures to prevent the operation of such illegal lending apps”.
During the meeting, the minister expressed concern about such applications offering loans or micro-loans at exorbitant rates, especially to vulnerable and low-income individuals, and resorted to extortion and criminal intimidation to recover such applications loan.
Ms Sitharaman also pointed to “money laundering, tax evasion, invasion of privacy and data and the potential for misuse of unregulated payment aggregators, shell companies and defunct NBFCs”.
The central bank is also responsible for monitoring “mule or hire” accounts that can be used for money laundering, and screening and liquidating dormant non-banking financial companies (NBFCs) to prevent their misuse by operators of such applications.
“The RBI will ensure that the registration of payment aggregators is completed within a certain time frame, after which unregistered payment aggregators will not be allowed to operate,” the finance ministry said in a statement, adding that the Ministry of Corporate Affairs will take steps to prevent their abuse.
“Measures should be taken to increase cyber awareness among customers, bank staff, law enforcement agencies and other stakeholders,” the minister ordered after a “detailed review of the legal, technical and procedural aspects of such applications”. The Treasury said it would regularly review the actionable points of compliance.