In light of the rise in cases of digital fraud, Finance Minister Nirmala Sitharaman has agreed to take a number of steps to regulate the operation of illicit lending apps after discussing a number of related concerns during a meeting. ‘a meeting.
The majority of digital lending apps operate independently and without central bank registration. Due to harassment from a handful of digital loan app owners, there have been an increasing number of reported borrower suicides.
The meeting chaired by the minister on Thursday decided that RBI would create a whitelist of all permitted apps and that the Department of Electronics and Information Technology (MeitY) would ensure that only those were available on the app stores.
In order to prevent their abuse, the RBI will keep tabs on “mule/leased” accounts that could be used for money laundering and review/cancel dormant NBFCs.
The Ministry of Finance said in a statement on Friday that the central bank will also ensure that the registration of payment aggregators is completed within a deadline and that no unregistered payment aggregators will be allowed to operate after that.
The Ministry of Corporate Affairs (MCA) will identify bogus companies and de-register them as part of measures to stop the spread of these apps to stop abuse.
Additionally, steps should be taken to increase the cyber knowledge of customers, bank employees, law enforcement and other stakeholders about these applications.
Each department or agency has been instructed to take every precaution to stop the use of these apps.
The finance minister expressed concern at the meeting about the increase in illegal lending apps that offer loans and microloans, especially to vulnerable and low-income groups of people, at exorbitant interest rates and processing/hidden fees, as well as predatory clawback practices like blackmail and criminal intimidation.
According to the statement, Sitharaman also raised the possibility of money laundering, tax evasion, data/privacy breaches and abuse of unregulated payment aggregators, shell companies, former NBFCs, etc. . for doing such acts.
The meeting was attended by the Secretaries of Finance, Economic Affairs and Revenue along with the Deputy Governor and Chief Executive of the RBI and the Secretaries of Corporate Affairs and Financial Services.