Apps

Ministry of Finance outlines multiple steps to prevent illegal loan apps

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Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman chaired a meeting yesterday to discuss the various issues related to “illegal loan apps” outside the mainstream banking channels.


The meeting was attended by the Secretary of Finance, Ministry of Finance; Secretary, Economic Affairs; Secretary, Income, & Corporate Affairs (Additional Expenses); Secretary, Financial Services; Secretary, Electronics & Information Technology; vice governor, RBI; and Executive Director, RBI.


The Treasury Secretary expressed concern at 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 blackmail recovery practices, criminal harassment etc.


smt. 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.


After extensive consideration of the legal, procedural and technical aspects of the matter, the meeting decided that:


RBI will create a “Whitelist” of all legal Apps and MeitY will ensure that only these “Whitelist” Apps are hosted in App Stores.


RBI will monitor the ‘mule/rented’ accounts that can be used for money laundering and to review/cancel dormant NBFCs to prevent abuse.


RBI will ensure that the registration of Payment Aggregators is completed within a time frame and after that no unregistered Payment Aggregators will be able to function.

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