Finance Minister Holds Top-Level Meet To Cull Illicit Spread Of Digital Lending Apps

During the 28th Financial Stability and Development Council (FSDC) meeting chaired by Finance Minister Nirmala Sitharaman, key government officials discussed the ill effects of unauthorised lending through online apps and measures to curb its spread. 

The meeting saw the participation of Reserve Bank of India (RBI) Governor Shaktikanta Das, SEBI’s (Securities and Exchange Board of India) chairperson Madhabi Puri Buch, and Ministry of Finance’s Chief Economic Adviser Dr. V. Anantha Nageswaran, et al.

The finance minister asked the key decision makers in the meeting to up their vigil in containing the spread of unauthorised online lending apps. With this, the FM has reiterated the government’s concerns about the unregulated spread of digital lending in the country.

The RBI first issued a warning against such platforms in 2020, after several cases of death by suicide linked to loan collections surfaced. 

Notably, many reports of digital lending apps, with China links, offering loans to individuals at exuberant interest rates have emerged in the recent past. What is concerning is that these apps lure individuals into borrowing easily available loans and then employ predatory money recovery tactics, pushing many to take drastic measures.

Two years after the regulatory bodies were first alarmed by the instances of death by suicides concerning digital lending, the government directed tech giant Google to implement stricter norms to check the spread of such platforms in 2022. 

In December last year, Google removed 2,500 fraudulent lending apps from its Play Store. 

Despite the government’s stern stance to curb the rise of digital lending apps, much has yet to be done, as an increasing number of illegal lending apps still exist in the country’s digital lending ecosystem.  

Last month, the Controller General of Defence Accounts (CGDA) flagged concerns over two digital lending apps, CASHe and Toop, citing potential security risks. 

These entities bank on the growing appeal of the digital lending space in India, which is expected to grow to $720 Bn by 2030, as per Inc42’s State Of Indian Fintech Ecosystem Q3 2023 report.