Govt cracks down on illegal loan Apps, RBI tasked to prepare ‘whitelist’

Govt cracks down on illegal loan Apps, RBI tasked to prepare ‘whitelist’

New Delhi: Concerned over illegal loan Apps such as KOKO Loan and JOJO Loan with most of them having Chinese links, the government has decided to crack down on such apps with a comprehensive action plan.

Finance Minister Nirmala Sitharaman has held a high-level meeting to prevent operations of such illegal loan apps with senior officials from the Finance Ministry, Reserve Bank of India (RBI) and Ministry of Electronics and Information Technology (MeitY) in attendance.

The Minister expressed concern 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 processing/hidden charges, and predatory recovery practices involving blackmailing, criminal intimidation etc.

“Smt. Sitharaman also noted the possibility of money laundering, tax evasions, breach/privacy of data, and misuse of unregulated payment aggregators, shell companies, defunct NBFCs etc. for perpetrating such actions,” an official statement from the Finance Ministry said on Friday.

Following detailed discussion on the issue, it was decided that RBI will prepare a “Whitelist” of all the legal Apps and MeitY will ensure that only these “Whitelist” Apps are hosted on App Stores.

RBI will monitor the ‘mule/rented’ accounts that may be used for money laundering and to review/cancel dormant NBFCs to avoid their misuse. It will ensure that registration of payment aggregators be completed within a timeframe and no un-registered payment aggregator be allowed to function after that.

The Ministry of Corporate Affairs will identify shell companies and de-register them to prevent their misuse.

“Steps should be taken to increase cyber awareness for customers, bank employees, law enforcement agencies and other stakeholders. All Ministries/Agencies to take all possible actions to prevent operations of such Illegal Loan Apps,” it was decided during the high-level meet on Thursday.

UNI

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