RBI, Several Ministries Working Together To Tackle The Menace Of Chinese Loan Apps: FM

SUMMARY

The government has been taking action against apps that cheat people by offering loans: FM Nirmala Sitharaman in Rajya Sabha

The minister said that she has held several meetings with representatives of the RBI, officials of the finance ministry and the corporate affairs ministry on the issue

The RBI has received as many as 13,000 complaints in FY23 so far against banks and NBFCs regarding digital lending apps

The Reserve Bank of India (RBI) and several central ministries are working together to keep a check on illegal Chinese mobile loan apps offering easy loans and cheating people, Finance Minister Nirmala Sitharaman said in the Rajya Sabha on Friday.

The minister said that the government has been taking action against apps that cheat people by offering loans.

Besides, the minister said that she has held several meetings with representatives of the central bank, officials of the finance ministry and the corporate affairs ministry on the issue.

“A lot of apps that have been badly misused have also been brought to the attention of MeiTY,” Sitharaman said. “So there is a coordinated effort to contain such apps. And also to take action against those who are misusing,” she added.

The RBI has received as many as 13,000 complaints in FY23 so far against banks and non-banking financial institutions (NBFCs) regarding digital lending apps and recovery agents harassing customers, the Minister of State in the Ministry of Finance Dr Bhagwat Karad recently said in a written reply in the LokSabha.

The illegal loan apps offer quick loans but often charge very high interest rates. Besides, their recovery agents have also been accused of harassing the customers for paying back the amount. There have been many cases of customers committing suicide due to this harassment.

In September, Sitharaman announced that the RBI would be creating a whitelist of legal digital lending apps that offer loans, and the Ministry of Electronics and Information Technology (MeitY) would ensure that only these apps are hosted on app stores.

Considerably in August, Google said that it had removed over 2,000 loan apps from its Play Store since January 2022. Later in September, Google updated its policy for direct loan disbursal apps and credit aggregators on the Google Play Store in India to prominently display a link to the partner bank or NBFCs.

The Enforcement Directorate (ED) has been investigating several such illegal loan apps. In many of the cases, the ED found that the apps were operated by Chinese nationals or entities linked to China.