Home / Industry / Banking /  Didn’t seek loan app ban: RBI

The Reserve Bank of India (RBI) did not seek to ban any specific loan app from app stores but has merely shared with the government a list of apps that are used by entities it regulates, deputy governor Rajeshwar Rao said on Wednesday.

Mint reported on Wednesday that a report on the government banning close to 138 gambling apps and 94 loan apps over concerns of “Chinese linkages" has caused panic in the industry. The report said that some popular loan apps, such as PayU’s buy-now-pay-later (BNPL) service LazyPay, Kissht, and Faircent, are seen as part of a ‘partial’ list that has been floating around in some fintech industry-specific WhatsApp groups since Monday.

Junior finance minister Bhagwat Karad said in the Rajya Sabha on Tuesday that RBI has furnished a list of digital lending apps being used by regulated entities to the ministry of electronics and information technology (MeitY).

MeitY has, in turn, shared the list with app stores and requested them to ensure that only the apps in the list are hosted on their app stores, Karad said.

This is not the first time the government has moved to remove certain apps from app stores in India. Over the past couple of years, several predatory loan apps have used the proliferation of smartphones and cheap data connections in India to their advantage to offer quick loans.

During covid-19, several such apps were accused of charging usurious interest rates and using unfair recovery practices when borrowers failed to repay on time.

“These apps do not belong to entities regulated by RBI. Those that have our registrations are primarily NBFCs. In turn, NBFCs use several apps," RBI governor Shaktikanta Das said on Wednesday.

He added that RBI told NBFCs to give a list of apps they use because a lot of illegal apps promise loans through mobile phones, which have not been appointed by any NBFC.

“We have given the government a list of apps which are used by NBFCs present in digital lending. Based on that, the government has taken this action," Das said.

Karad told the Parliament on Tuesday that the Directorate of Enforcement (ED) has initiated an investigation under the Prevention of Money Laundering Act (PMLA) in several cases where the proceeds of crime have been generated and acquired through illegal loan apps.

“In these cases, as on date, proceeds of crime of 2,116 crore (approx) has been identified, out of which proceeds of crime amounting to 859.15 crore have been attached/seized/frozen under the provisions of PMLA. Further, assets amounting to 289.28 crore have been seized under section 37A of the Foreign Exchange Management Act, 1999," he said.

Shayan Ghosh
Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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