Govt cracks down on illegal loan apps, only whitelisted apps to be hosted on App Store

New Delhi, Sep 09: In a bid to put an end to the illegal loan, the Reserve Bank of India will prepare a "whitelist" of instant finance apps that will be allowed to be hosted on these online storefronts.

The central bank will prepare the list and the Ministry of Electronics and Information Technology (MeitY) will ensure only those apps are hosted on the app stores.

Finance Minister Nirmala Sitharaman has also expressed concern on increasing instances of Illegal Loan Apps offering loans, and micro credits, especially to vulnerable and low-income group people at exorbitantly high-interest rates.

It also includes processing/hidden charges, and predatory recovery practices involving blackmailing, criminal intimidation etc.

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

Illegal Loan Apps: What RBI plans to do

• RBI will prepare a "Whitelist" of all the legal Apps and MeitY will ensure that only these "Whitelist" 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 registration of payment aggregators is completed within a timeframe and no un-registered payment aggregator be allowed to function after that.
• MCA will identify shell companies and de-register 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 to take all possible actions to prevent operations of such Illegal Loan Apps.

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

It may be recalled that in August, Google removed more than 2,000 loan apps from its Android Play Store as these apps did not meet the company's policy.

These instant loan apps avaialable online. They usually target people from low-income groups by offering loans of starting from Rs 2,000 to Rs 50,000 and charge a high-interest rate.

As per RBI report, there were over 1,100 such apps available for Indian Android users across 80 application stores in 2021.