Illegal Loan Apps in Trouble; RBI to Make Whitelist of Instant Finance Apps

In recent times, the law enforcement agencies of India have been tracking risky loan apps operating in the country unlawfully. Finance Minister Nirmala Sitharaman has taken notice of the fraudulent instant loan apps and has directed the RBI to prepare a whitelist of instant finance apps that are clear to continue operations in the country.

Whitelist of Instant Finance Apps

Once the whitelist of instant finance apps is prepared by the RBI, the Ministry of Electronics and Information Technology (MeitY) will make sure that only the apps with RBI clearance will get listed on the app stores.

In a press release, the government stated that RBI will ensure the registration of payment aggregators is done within a specific timeframe and the unregistered payment aggregators will not be allowed to function after this move. Necessary steps have to be enforced to increase cyber awareness among ban employees, customers, stakeholders, and law enforcement agencies.

Action Against Illegal Loan Apps

The decision comes a day after the Finance Minister chaired a meeting with RBI and the officials of the finance ministry to discuss the various issues related to illegal loan apps. These apps have been operating under the nose of the banking channels in India. Sitharaman expressed concerns regarding blackmailing and criminal intimidation among other predatory recovery practices that these illegal finance apps have been implementing.

As per the government's press release, Sitharaman mentioned the possibilities of tax evasion, money laundering, misuse of unregulated payment aggregators, breach of data, defunct NBFCs, shell companies, etc. for perpetrating these actions.

All ministries and agencies have been asked to take all possible actions to prevent the operations of such illegal loan apps. The finance ministry will monitor the actionable points for compliance on a timely basis. It is believed that the home ministry will soon start a campaign to educate people about the fake Chinese loan apps, and is likely to write a letter to all states to take the required steps against them.

Related: Report on how illegal loan apps could be risky

Payment Gateway Locations Raided

Recently, Enforcement Directorate (ED), the country's financial watchdog raided six online payment gateway locations in Bengaluru. This included companies that helped Chinese individuals open firms in India with fake directors. As a part of the raid, the police seized Rs. 17 crores from firms, including Paytm, Razorpay, and Cashfree, among others. Triggered by these raids, Sitharaman has decided to have the RBI form a whitelist of financial apps.