According to a public notification, the government is stepping up scrutiny on digital lending apps in an attempt to weed out ones which conduct unethical lending and recovery practices. As per the notification, the Reserve Bank of India (RBI) has been asked to prepare a list of legal digital lending apps while the government will help ensure that only such apps conduct lending.
The development comes in the backdrop of the concerns raised by the Finance Minister on increasing instances of illegal loan apps offering loans/micro credits, especially to vulnerable and low-income group people at exorbitantly high interest rates and predatory recovery practices involving blackmailing.
Meanwhile, the government has also directed the RBI to monitor accounts that may be used for money laundering and to also review and if needed cancel licences of dormant shadow banks which can be misused by the lending apps. Besides, all the other government ministries have also been asked to take all possible action to prevent operations of such apps while the Indian corporate ministry has been directed to identify shell companies and de-register them to prevent their misuse.
