India plans to mandate authorized lending apps on the country’s app stores, the latest in a string of recent moves by the world’s second-largest internet market to crack down on sketchy and unethical lenders .
The Reserve Bank of India, the country’s central bank, will prepare a “whitelist” of all legal apps and the country’s IT ministry will ensure that only whitelisted apps are hosted on apps. ‘applications, said the Ministry of Finance. said in a press release.
The central bank will also monitor “mule” or “leased” accounts for money laundering practices and review and revoke the licenses of non-bank financial institutions if found guilty, the finance ministry said on Friday.
Payment aggregators in the country will be required to register within a specific timeframe, and India’s Ministry of Commerce will work to identify front companies and revoke their registrations to prevent abuse.
In recent quarters, Indian authorities have cracked down on loan apps that charge exorbitant fees and use unethical means to collect payments. India’s central bank said earlier this month it was moving forward with new guidelines for digital lending that will require companies to provide more disclosure and transparency for the benefit of consumers, as well as restrict several business practices.
Dozens of loan apps have sprung up in India in recent quarters, with many offering loans to customers with zero credit scores and low savings, and later using unethical means to recover their silver. Law enforcement across the country has made hundreds of arrests following complaints alleging abuse and harassment by officers collecting refunds on behalf of loan applications.
Due to the psychological pressure exerted by the predators behind these platforms, some individuals have also taken their own lives, according to local media. Although the latest move aims to limit the availability of lending apps through app stores — a bold step, certainly — several of these apps are in circulation outside of app stores. These links are provided to customers through SMS and even through advertisements.
Google said last month it had blocked more than 2,000 unethical loan apps in India this year.
“The Minister of Finance expressed concern over the increase in cases of illegal loan apps offering loans/microloans, especially to vulnerable and low-income people at exorbitant interest rates and processing fees/ hidden, and predatory scavenging practices involving blackmail, criminal intimidation, etc.,” the department announced today.
“Smt. Sitharaman [Finance Minister] also noted the possibility of money laundering, tax evasion, data breach/privacy, and misuse of unregulated payment aggregators, front companies, former NBFCs, etc. to perpetrate such actions.
Apple and Google did not immediately respond to requests for comment.
In a statement, industry body Payments Council of India said: “The global decision on ‘illegal loan applications’ is highly commendable as it will save millions of innocent people from falling prey to such unregistered loan sharks. , unregulated and illegal, while ensuring that international fraudsters do not have access to Indian payment systems.
