Friday, September 30, 2022
HomePolicy WatchCentre's Crackdown On Illegal Loan Apps: RBI Prepares 'Whitelist' To Tackle Menace

Centre’s Crackdown On Illegal Loan Apps: RBI Prepares ‘Whitelist’ To Tackle Menace

NEW DELHI: To combat the growth of illicit lending apps on smartphone app stores, the Reserve Bank of India (RBI) will create a “whitelist” of instant finance apps that will be permitted to be housed on these online marketplaces.

According to a government official, the RBI will produce the list, and the Ministry of Electronics and Information Technology (MeitY) would ensure that only those apps are hosted on app stores.

The RBI decided to conduct this exercise after Finance Minister Nirmala Sitharaman recently expressed concern about the increasing instances of illegal loan apps offering loans/micro credit — particularly to vulnerable and low-income people — at exorbitant interest rates and processing/hidden charges, as well as predatory recovery practises such as blackmailing, criminal intimidation, and so on.

Nirmala Sitharaman, Union Minister for Finance and Corporate Affairs presided over a meeting to explore the numerous challenges associated to “Illegal Loan Apps” that operate outside of traditional banking channels.

The meeting was attended by the Finance Secretary, Ministry of Finance; the Secretary of Economic Affairs; the Secretary of Revenue and Corporate Affairs (Addl. Charge); the Secretary of Financial Services; the Secretary of Electronics and Information Technology; the Deputy Governor of the Reserve Bank of India; and the Executive Director of the Reserve Bank of India.

The Finance Minister expressed concern about the growing number of Illegal Loan Apps that offer loans/microcredits, particularly to vulnerable and low-income people, at exorbitantly high-interest rates and processing/hidden charges, as well as predatory recovery practices such as blackmailing, criminal intimidation, and so on.

Sitharaman mentioned the likelihood of money laundering, tax evasion, data breach/privacy, and the use of unregulated payment aggregators, shell firms, and defunct NBFCs for such purposes.

Following extensive consideration on the legal, procedural, and technological aspects of the matter, the meeting decided:

  • RBI will create a “Whitelist” of all legal Apps, and MeitY will ensure that only those Apps on the “Whitelist” are hosted on App Stores.
  • To avoid misuse, the RBI will monitor ‘mule/rented’ accounts that may be used for money laundering and review/cancel dormant NBFCs.
  • RBI will ensure that registration of payment aggregators be completed within a timeframe and no un-registered payment aggregator be allowed to function after that. To avoid their misuse, the MCA will identify and deregister shell corporations.
  • Steps should be taken to increase cyber awareness for customers, bank employees, law enforcement agencies and other stakeholders.
  • All Ministries/Agencies to take all possible actions to prevent operations of such Illegal Loan Apps.

Follow The420.in on

 Telegram | Facebook | Twitter | LinkedIn | Instagram | YouTube

Subscribe to our newsletter

To be updated with all the latest news, offers and special announcements.

Most Popular

Recent Comments