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FM outlines multiple steps to prevent operations of illegal loan apps

Union Finance and Corporate Affairs Minister  Nirmala Sitharaman presided over a meeting on Thursday to discuss the various problems regarding illegal loan apps that operate outside of traditional banking channels. 

Union Minister for Finance & Corporate Affairs Nirmala Sitharaman

Union Finance and Corporate Affairs Minister Nirmala Sitharaman presided over a meeting on Thursday to discuss the various problems regarding illegal loan apps that operate outside of traditional banking channels.

The FM expressed concern about the growing number of illegal loan apps that offer loans/microcredits, particularly to vulnerable and low-income people, at exorbitantly high-interest rates and processing/hidden charges, as well as predatory recovery practices such as blackmailing, criminal intimidation, and so on. The meeting decided, after extensive deliberation on the legal, procedural, and technical aspects of the issue, that:

  • RBI will prepare a ‘Whitelist’ of all the legal apps and MeitY 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 review/cancel dormant NBFCs to avoid their misuse.
  • RBI will ensure that the registration of payment aggregators is completed within a timeframe and no unregistered payment aggregator be allowed to function after that.
  • MCA will identify shell companies and deregister them to prevent their misuse.
  • Steps should be taken to increase cyber awareness for customers, bank employees, law enforcement agencies, and other stakeholders.
  • All ministries/agencies are to take all possible actions to prevent the operations of such illegal loan apps.

The ministry of finance will monitor the actionable points for compliance on a regular basis.

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PR Newswire