Finance Minister Smt. Nirmala Sitharaman chairs meeting on “Illegal Loan Apps”

Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman chaired a meeting yesterday to discuss the various issues related to “Illegal Loan Apps” outside the regular banking channels.

The Ministry of Finance‘s Finance Secretary, the Secretary for Economic Affairs, the Secretary for Revenue and Corporate Affairs (Addl. Charge), the Secretaries for Financial Services and Electronics and Information Technology, the Deputy Governor of the Reserve Bank of India, and the Executive Director of the RBI all attended the meeting.

The Finance Minister expressed concern about the rise in illegal loan apps that offer loans and microcredits, particularly to vulnerable and low-income groups of people, at exorbitantly high interest rates, processing fees, and hidden costs, as well as about predatory recovery practises like blackmailing and criminal intimidation. Smt. The danger of money laundering, tax evasion, data breach/privacy, and the abuse of unregulated payment aggregators, shell firms, defunct NBFCs, etc. for carrying out such activities were also mentioned by Sitharaman.

After detailed deliberations on legal, procedural & technical aspects of the issue, it was decided in the meeting that:

1. RBI will prepare a “Whitelist” of all the legal Apps and MeitY will ensure that only these “Whitelist” Apps are hosted on App Stores.

2. RBI will monitor the ‘mule/rented’ accounts that may be used for money laundering and to review/cancel dormant NBFCs to avoid their misuse.

3. RBI will ensure that registration of payment aggregators be completed within a timeframe and no un-registered payment aggregator be allowed to function after that.

4. MCA will identify shell companies and de-register them to prevent their misuse.

5. Steps should be taken to increase cyber awareness for customers, bank employees, law enforcement agencies and other stakeholders.

6. All Ministries/Agencies to take all possible actions to prevent operations of such Illegal Loan Apps.

The Ministry of Finance will monitor the actionable points for compliance on a regular basis.