Finance Minister Nirmala Sitharaman has asked the Reserve Bank of India (RBI) to prepare a list of all the legal loan apps and the Ministry of Electronics and Information Technology (MeitY) to ensure that only these apps are available on the app stores. Sitharaman chaired a meeting to discuss the various issues related to illegal loan apps on September 8.

Sitharaman expressed concerns over the rising instances of illegal lending apps offering loans and micro credits, especially to vulnerable and low-income group people at exorbitantly high interest rates and with processing fee or hidden charges. The predatory recovery practices involving blackmailing, criminal intimidation used by these illegal loan apps was also taken into account, according to a release by Ministry of Finance.

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.

Finance Minister outlined multiple steps to prevent operations of such illegal loan apps

1) RBI will prepare a “Whitelist” of all the legal Apps and MeitY will ensure that only these “Whitelist” Apps are hosted on App Stores.

2) RBI will monitor the ‘mule/rented’ accounts that may be used for money laundering and to review/cancel dormant NBFCs to avoid their misuse.

3) 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.

4) MCA will identify shell companies and de-register them to prevent their misuse.

5) Steps should be taken to increase cyber awareness for customers, bank employees, law enforcement agencies and other stakeholders.

6) All Ministries/Agencies to take all possible actions to prevent operations of such Illegal Loan Apps.

The Ministry of Finance will monitor the actionable points for compliance on a regular basis.

The meeting was attended by the Finance Secretary, Ministry of Finance; Secretary, Economic Affairs; Secretary, Revenue, & Corporate Affairs (Addl. Charge); Secretary, Financial Services; Secretary, Electronics & Information technology; Deputy Governor, RBI; and Executive Director, RBI.