Industry Body FACE Supports Govt’s ‘Predatory’ Lending Apps Ban

Industry body Fintech Association for Consumer Empowerment (FACE) has come forward in support of the Central Government’s actions and the policy intent to ban predatory lending apps with dubious antecedents. On 5th February, the Ministry of Electronics and Information Technology (MeitY) imposed a ban on over 90 digital lending apps from app stores.

According to FACE, this ban would ensure that only legitimate lending apps operating under the RBI’s regulatory framework are available.

“All of us as industry stakeholders, including fintech entities and investors and lenders, draw huge confidence from the Government’s actions to create a safe and robust ecosystem for consumers and the fact that MeitY is resolving the issue for legitimate entities with the highest priority. Steps like this will improve customer trust in digital lending and expand the market for legitimate entities,” Sugandh Saxena, CEO of FACE, said.

According to Saxena, the fintech lenders, who have built their offerings leveraging India’s digital public infrastructure and under the applicable regulations and laws of the land, have long faced the onslaught of illegal lending apps. Such illegal lending apps erode the consumers’ trust and encroach the market of legitimate players, she added.

Last week, the government ordered a ban on 138 online betting apps and 94 digital lending apps for their alleged connections with China. The digital lending apps also came under scrutiny for their shady recovery tactics and increasing customer complaints regarding the same.

Later in the week, MeitY asked internet service providers (ISPs) and Google to unblock some of the digital lending apps and websites including LazyPay, Kissht, BuddyLoans, Indiabulls Home Loans, Faircent and mPokket against which it issued ban orders earlier this week, Inc42 reported.

The illegal loan apps have come under the government’s scrutiny for some time now. Recently, the Finance Ministry also told Rajya Sabha that the Enforcement Directorate has initiated several cases under the Prevention of Money Laundering Act (PMLA) where the proceeds of crime have been generated and acquired by accused persons or entities through illegal loan apps.

As of February 7, the government has identified proceeds of crime of around INR 2,116 Cr, of which INR 859.15 Cr have been attached, seized or frozen under the PMLA provisions. Further, assets of INR 289.28 Cr have been seized under provisions of the Foreign Exchange Management Act (FEMA), the government added.