RBI will create a ‘whitelist’ of approved instant finance apps amid proliferation of illegal loan apps

RBI to Prepare ‘Whitelist’ of Approved Instant Finance Apps Amid Proliferation of Illegal Loan Apps

In recent days, law enforcement agencies in India have been tracking and tracking down risky loan apps operating illegally in the country. Finance Minister Nirmala Sitharaman has taken cognizance of these fraudulent instant loan apps and directed the Reserve Bank of India (RBI) to prepare a ‘whitelist’ of instant finance apps, which are actually clear to operate in the country. Many low-income Indians, of late, have fallen into the trap of predatory loan apps and are exposed to dangerous financial and physical risks.

Once the whitelist is created, India’s Ministry of Electronics and Information Technology (MeitY) will ensure that only RBI-approved apps are featured on application stores.

“RBI will ensure that registration of payment aggregators is completed within a time frame and no un-registered payment aggregators will be allowed to operate thereafter. “Steps should be taken to increase cyber awareness among customers, bank employees, law enforcement agencies and other stakeholders,” the government said. Press release,

The decision came a day after Sitharaman chaired a meeting with RBI and Finance Ministry officials to discuss various issues related to ‘illegal loan apps’ operating in the country under the nose of regular banking channels.

As part of the meeting, Sitharaman raised concerns about the predatory recovery methods being used by these illegal loan apps. This includes blackmailing and criminal intimidation.

“Seetharaman also noted the possibility of money laundering, tax evasion, data breach/privacy and misuse of unregulated payment aggregators, shell companies, defunct NBFCs etc. for taking such actions,” the government’s press release added.

Earlier last week, India’s financial watchdog, the Enforcement Directorate (ED) raided Six online payment gateway locations in Bengaluru were ‘managed’ by Chinese individuals due to alleged irregularities in mobile app-based lending. Also, the police confiscated Rs. 50,000. 17 crore from raided companies including Razorpay, Paytm and Cashfree.

The raids appear to have triggered Sitharaman’s decision to whitelist finance apps with the RBI.

In fact, on Friday 9th September, the Chief Minister of Andhra Pradesh no YS Jagan Mohan Reddy Earlier this week, a couple from Rajahmundry in East Godavari district, after committing suicide due to harassment by the loan app’s agents, asked the state authorities to crack down on online money-lending apps.


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