Troubled Illegal Loan Applications; RBI will whitelist instant funding applications

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In recent times, Indian law enforcement agencies have been illegally tracking subprime lending apps operating in the country. Finance Minister Nirmala Sitharaman has come to know about the fraudulent instant loan applications and ordered the RBI to prepare a whitelist of instant finance applications that are clear to continue operations in the country.

RBI will whitelist instant funding applications

Instant Funding Apps Whitelist

Once the instant finance app whitelist is prepared by the RBI, the Ministry of Electronics and Information Technology (MeitY) will ensure that only apps with RBI permission will be listed on the stores of applications.

In a press release, the government said that RBI will ensure that the registration of payment aggregators is done within a specific time frame and that unregistered payment aggregators will not be allowed to operate after this decision. Necessary measures should be applied to increase cyber awareness among employees, customers, stakeholders and law enforcement.

RBI will whitelist instant funding applications

Action against illegal loan applications

The decision comes a day after the Minister of Finance chaired a meeting with RBI and Ministry of Finance officials to discuss various issues related to illegal loan applications. These apps work under the nose of banking channels in India. Sitharaman expressed concerns about blackmail and criminal intimidation among other predatory clawback practices that these illegal financial apps have implemented.

According to the government press release, Sitharaman mentioned possibilities of tax evasion, money laundering, misuse of unregulated payment aggregators, data breach, defunct NBFCs, front companies, etc. . to carry out these actions.

All ministries and agencies have been urged to take all possible measures to prevent the operations of these illegal loan applications. The Department of Finance will monitor achievable compliance items in a timely manner. It is believed that the Home Office will soon launch a campaign to educate people about fake Chinese loan apps, and is likely to write a letter to all states to take necessary action against them.

Related: Report on how illegal loan apps could be riskyRelated: Report on how illegal loan apps could be risky

Payment Gateway Locations Searched

Recently, the Directorate of Law Enforcement (ED), the country’s financial watchdog, raided six online payment gateways in Bengaluru. This included companies that helped Chinese people open businesses in India with fake directors. As part of the raid, police seized Rs. 17 crore from businesses including Paytm, Razorpay and Cashfree among others. Triggered by these raids, Sitharaman decided that the RBI should form a whitelist of financial apps.

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Article first published: Friday, September 9, 2022, 9:25 p.m. [IST]