Finance Minister Nirmala Sitharaman on September 8 chaired a meeting on illegal lending apps, with a decision being taken that the Reserve Bank of India (RBI) will prepare a 'whitelist' of all such legal applications.
The Ministry of Electronics and Information Technology will then ensure that only these whitelisted digital lending applications are hosted on app stores, the finance ministry said in a statement on September 9.
"The finance minister expressed concern on increasing instances of Illegal Loan Apps offering loans/micro credits, especially to vulnerable and low-income group people at exorbitantly high interest rates and processing/hidden charges, and predatory recovery practices involving blackmailing and criminal intimidation," the finance ministry statement said.
Sitharaman also noted the possibility of money laundering, tax evasions, breach of data, and misuse of unregulated payment aggregators, shell companies, defunct non-bank finance companies for perpetrating such actions.
The meeting, attended by secretaries from the finance, corporate affairs, and information technology ministries along with officials from the RBI, comes in the wake of increasing concerns surrounding illigal mobile-based lending applications.
Late last month, Moneycontrol reported the RBI is working to set up a fraud registry to keep scamsters at bay.
This fraud registry, according to RBI Executive Director Anil Kumar Sharma, will capture information like IP (internet protocol) addresses and phone numbers repeatedly used to commit frauds. Once reported, these numbers and IP addresses will be blacklisted.
Some of the other decisions taken at the meeting on September 8 include:
>> RBI to monitor 'mule/rented' accounts that may be used to launder money
>> Registration of payment aggregators will be completed by the RBI within a certain period of time after which only such payment aggregators will be allowed to function
>> The corporate affairs ministry will identify shell companies and de-register them to prevent their misuse, while the RBI will do the same for dormant non-bank finance companies
The September 8 meeting also comes after the RBI said on August 10 that it had accepted certain recommendations made by its working group on digital lending. However, these would only be applicable on entities under its purview.