RBI faces tough task of regulating lending apps
Easy access to technology, absence of legal framework poses a challenge
Easy access to technology and quick-fire ways to work around regulations pose a serious challenge to curbing unauthorized lending activity by mobile -based apps, said experts. In the past few years there has been a significant surge in instant lending apps, the origins of many of which can be traced to China. Experts maintained that regulation and supervision has largely failed to catch up because of complex technological challenges and the absence of the correct framework. As a result, several authorized apps continue to operate with impunity, drawing unsuspecting customers into loan traps that entail prohibitive interest rates and resorting to coercive tactics when customers fail to pay up. “You can pick up apps like these on code sharing sites. Some of these guys are also white-labelling these apps and selling them to other buyers," said tech policy analyst Prasanto K. Roy. White label apps can be shared across the industry, because the basic requirements remain the same for all players. “The basic premises are fairly simple. You get the person’s details and take a bunch of permissions (to access data), some of which are scary permissions, such as the ability to change contacts," he said.
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