The Indian government said in a notice on Friday that the Indian government is stepping up scrutiny of digital lending apps in a bid to weed out apps that engage in unethical lending and refund practices.
She added that the central bank has been asked to prepare a list of legal digital lending applications while it will help the government to ensure that only these applications are lending.
The government said- “The Minister of Finance has expressed concern about the increasing cases of illegal loan applications offering micro loans/credits, especially to vulnerable and low-income groups at very high interest rates…and unfair recovery practices involving extortion.”
The government has also directed the Reserve Bank of India to monitor accounts that can be used for money laundering as well as review and revoke licenses of dormant shadow banks if necessary which can be abused by lending apps.
All other government ministries have also been asked to take all possible measures to prevent the operation of such apps while the Indian Companies Ministry has been directed to identify shell companies and deregister them to prevent their misuse.
Tougher digital lending rules and increased scrutiny of these illegal loan applications come after increased consumer complaints about unfair practices alarmed the central bank and government.
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