NEW DELHI: Fintech experts believe that the Union government needs to be more proactive in rooting out the menace of predatory digital lending apps. This includes taking a firmer stand against such apps of Chinese origin.
“Ministry of electronics and information technology (MEITY) has carried out multiple rounds of app bans. However, it has never banned any lending app based out of China. They are sometimes even more dangerous for an individual’s privacy than gaming apps. RBI too has not acted beyond giving advisories,” said Srikanth L of Cashless Consumer, a citizen-led collective that raises awareness around digital transactions.
On the other hand, People’s Bank of China fined a leading Chinese credit agency, Pengyuan Credit, with 620,000 yuan for “engaging in personal credit operations independently and without approval,” he further said.
The RBI has received 1,019 complaints regarding unregulated and unregistered online lending apps, said Union minister of state for finance Anurag Thakur in a written reply in Lok Sabha on February 8. He also said the central bank has issued a warning to customers in December to generate awareness around the issue, and it has also set up a working group to study “all aspects of digital lending”. “Regional directors of regional offices of the RBI are also in touch with the state police,” the reply added.
Rogue lending apps, many hosted on Chinese servers, became increasingly common during the 2020 lockdown, when many who lost their livelihoods because of the pandemic were on the lookout for cash. The apps offered users short-term credit at very high interest rates and then, in some cases, harassed or abused borrowers for money. Google took down at least 100 such apps in January, after the Telangana police wrote to the technology giant about their misuse. According to law, any organisation lending money to the public must be approved by the RBI. These ‘rogue’ online lending modules, however, do not have such approval and therefore operate in a policy vacuum.