App Stores Have To Host RBI-Regulated Lending Apps: Union Minister

App stores need to host Digital Lending Apps (DLAs) regulated by the central bank Reserve Bank of India, said Dr. Bhagwat Kisanrao Karad, the Union Minister of State for Finance, in a written reply to Parliament.

The RBI shared a list of digital lending apps (DLAs) being used by its regulated entities with the Ministry of Electronics and Information Technology (MeitY). The list was further shared by the MeitY with app stores and asked platforms to host only those DLAs mentioned on the list, the minister informed.

He further shared that the central bank issued a slew of digital lending guidelines.These include: due diligence of loan service providers (LSPs), direct disbursal of credit from lenders’ bank accounts to borrowers’ bank accounts without any third-party accounts to avoid layering, publishing a list of DLAs, LSPs engaged by regulated entities and details of activities to avoid anonymity.

The development comes a day after MeitY banned 94 loan apps and 138 betting apps as part of its crackdown on Chinese loan apps. 

Several Indian lending apps such as Ola’s Avail Finance, loan app TrueBalance, KreditBee’s clone, LazyPay and Kissht, among others have been abolished for having Chinese links and, on the basis of consumer complaints received against them.

Other companies that are part of the list are BuddyLoan, CashTM, Indiabulls Home Loans, PayMe, Faircent and RupeerRedee, DreamLoan and CreditDay, as per YourStory sources.

The minister also shared that the anti-money laundering body Enforcement Directorate conducted multiple investigations into cases involving digital loan apps and has seized INR 2,116 Cr under money laundering norms to date. 

Out of INR 2,116 Cr, the regulatory body has collected INR 859.15 Cr under provisions of the Prevention of Money Laundering Act 2002, while assets worth INR 289.28 Cr have been forfeited under the Foreign Exchange Management Act, 1999.

In September last year, Finance Minister Nirmala Sitharaman shared concerns on the functioning of the digital loan apps. To curb these practices, the FM asked the central bank to create a whitelist of legal lending apps and meanwhile, the MeitY would ensure that lending apps mentioned on the list would only be listed on Google Play Store and the Apple App Store.

The central bank was also commanded to monitor ‘mule/rented’ accounts that can be used for money laundering and review or cancel those dormant NBFCs to cease their misuse.