The Indian government increasing its According to a government notification, the Indian government is increasing its oversight of digital lending apps to root out those that use unethical lending and recovery practices, the report released by the government on Friday.
The government will ensure that only these apps carry out lending, while the central bank has been asked to compile a list of authorized digital lending applications.
“The finance minister expressed concern on increasing instances of illegal loan apps offering loans/micro credits, especially to vulnerable and low-income people at exorbitantly high-interest rates … and predatory recovery practices involving blackmailing,” the government said.
The government has also ordered the Reserve Bank of India to oversee accounts that might be utilized for money laundering and to audit and, if necessary, revoke the licenses of dormant shadow banks that lending apps could exploit.
While the Indian Corporate Ministry has been instructed to identify shell companies and de-register those to avoid their misappropriation, all other government ministries have been asked to do everything they can to stop the activity of such apps.
The government and central bank have voiced alarm over a rise in consumer complaints about unfair practices, which has led to stricter regulations for digital lending and more scrutiny of these illegal loan apps.