Crackdown On Illegal Digital Lending Platforms: RBI To Prepare 'Whitelist' Of Legal Loan Apps

In a bid to check the spread of illegal digital lending platforms, the Reserve Bank of India (RBI) will soon prepare a 'whitelist' of legal digital apps that offer loans, and the Ministry of Electronics and Information Technology will ensure that only these apps are hosted on app stores.

"RBI will monitor the ‘mule/rented’ accounts that may be used for money laundering and to review/cancel dormant NBFCs to avoid their misuse," the Finance Ministry said in a release on Friday (9 September).

Further, 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, the ministry said.

The Ministry of Corporate Affairs will identify shell companies and de-register them to prevent their misuse, it added.

The decisions were taken in a meeting chaired by Union Finance Minister Nirmala Sitharaman on Thursday (8 September) to discuss the various issues related to “Illegal Loan Apps” outside the regular banking channels.

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 along with processing and hidden charges, and predatory recovery practices involving blackmailing, criminal intimidation etc, the ministry said.

Sitharaman also noted the possibility of money laundering, tax evasions, breach/privacy of data, and misuse of unregulated payment aggregators, shell companies, defunct NBFCs etc for perpetrating such actions.