RBI to end scam by fake loan apps, public repository to be created for digital lending apps

To address the problems arising from unauthorised digital lending apps (DLAs), the Reserve Bank proposes to create a public repository of DLAs deployed by its regulated entities to help consumers verify a digital lender, RBI Governor Shaktikanta Das announced on Thursday.

“The regulated entities (REs) will report and update information about their DLAs in this repository. This measure will help the consumers to identify the unauthorised lending apps,” Das explained.

Union Finance Minister Nirmala Sitharaman had also recently called upon financial sector regulators, including the Reserve Bank of India (RBI), to adopt supplementary measures to curb the rise of unauthorised online lending. At the 28th Financial Stability and Development Council (FSDC) meeting, FM Sitharaman emphasised the importance of regulators maintaining vigilance and taking proactive steps to identify potential risks to financial stability, given the prevailing domestic and global macro-financial conditions.

Earlier this year, the RBI also shared a list of official digital lending apps with the Ministry of Electronics and Information Technology (MeitY) which the Ministry has published on its website. This list is expected to help consumers access genuine and legal lenders so that they do not end up being exploited by illegal apps.

Apart from charging predatory interest rates, the illegal apps employ unethical methods for loan recovery, including harassment, intimidation, and blackmail. Media reports indicate that borrowers face severe harassment from agents, with instances of threats involving personal data, such as intimate photographs, that have even been used to coerce them.

Earlier, Google removed over 2,200 digital lending apps (DLAs) from its app store from September 2022 to August 2023.

The search giant has updated its policy regarding the enforcement of loan apps on the PlayStore, and only those apps are allowed which are published by the RBI’s regulated entities (REs) or those working in partnership with REs.

(With inputs from IANS)