Digital lending companies met with MeitY. Is respite on the way?
3 min read . Updated: 08 Feb 2023, 08:30 PM IST
PremiumDigital lending companies affected by the Ministry of Electronics and Information Technology (MeitY)'s sudden ban on 94 loan apps met with MeitY officials on Wednesday to discuss the issue, people familiar with the matter said
NEW DELHI : Digital lending companies affected by the Ministry of Electronics and Information Technology (MeitY)'s sudden ban on 94 loan apps met with MeitY officials on Wednesday to discuss the issue, people familiar with the matter said.
About 15 major firms met the MeitY officials in Delhi today. “Companies were given some 30 minutes slots to make individual representations and there were some group representations too," two persons aware of the details told Mint on the condition of anonymity.
Companies were strictly prohibited from sharing details outside of the meeting room.
Mostly all digital consumer lenders were covered in the list and few got impacted where their websites were blocked. Also, few companies got intimation from Google that their app might get blocked.
A fintech founder, who was part of today’s meeting said, “There is one list which Google has been given, on which the search engine giant is yet to act on. That’s why everybody panicked," he added.
“We met yesterday with MeitY and the Ministry of Home Affairs, and today we met with MeitY," one of the persons said.
According to sources, the digital lenders approached the Reserve Bank of India. “The RBI also forwarded one list to the government saying that many of these apps work with regulated entities and are legal," the person added.
What the government wants to know is – the colour of the money (basically the VCs backing); the kind of customers they are catering; customer grievance redressal mechanisms; where is the data getting stored etc.
“All these things are something that the authorities were looking for the answers from everyone. They have realised that most players or everyone works with/as a regulated entity, so that gave the officials the comfort…and they said that they will give some respite soon and asked to submit the declaration on all the points above," one of the persons aware of the discussions said.
Another person added while the discussion was positive, nothing can be said till the time there is any relief.
The sense the industry is getting is with all these discussions, the government will come up with a whitelisted list of apps which will be considered legal and rest everything will be blocked from the app stores.
In a crackdown on betting and digital loan apps, several popular names such as PayU’s LazyPay, Kissht, Faircent, Kreditbee, and others were blocked over ‘Chinese linkage’ concerns by MeitY.
Terming the whole situation scary, a fintech founder said, “Without any show-cause notice, suddenly things are happening. The whole digital lending industry has been battered to death. Why it has been happening, nobody understands. We thought that the RBI has come up with digital lending guidelines and now we can focus on building business, but now we know there is MeitY also."
While there is no clarity on the matter and what led to the government coming up with that list, RBI Governor Shaktikanta Das, post monetary policy report press conference on Wednesday, said, "We have given a list of apps which work with NBFCs (non-banking finance companies) to the government. On that basis, the government has taken this step."
Das added that the RBI asked NBFCs to share a list of digital lending apps they work with as "there are many illegal and illegitimate apps" which promise to lend.
