Treasury Department crackdown on illegal loan apps, orders RBI to prepare “whitelist”

Treasury Department crackdown on illegal loan apps, orders RBI to prepare “whitelist”

Minister of Finance and Corporate Affairs Nirmala Sitharaman recently chaired a meeting to discuss the various issues related to ‘illegal loan apps’ outside the mainstream banking channels.

The meeting was attended by the Secretary of Finance, Ministry of Finance; Secretary, Economic Affairs; Secretary, turnover and business affairs (extra costs); Secretary, Financial Services; Secretary, Electronics and Information Technology; Deputy Governor, Reserve Bank of India (RBI); and Executive Director, RBI.

Growing Concerns About Predatory Apps

According to a statement from the ministry, the finance minister expressed some concern about the increasing number of illegal loan apps offering loans/micro-credits, especially aimed at vulnerable groups and low incomes exorbitant high interest rates and processing/hidden costs. She also learned of predatory recovery practices that involved practices such as blackmail, criminal harassment etc.

She also highlighted the “possibility of” money laundering, tax evasion, data breach/privacy, and abuse of unregulated payment aggregatorsshell companies, defunct NBFCs, etc. for committing such actions.”


After extensive consideration of the legal, procedural and technical aspects of the matter, we came to some decisions. The Ministry of Finance has asked the Reserve Bank of India to prepare a whitelist of all legal apps while the Ministry of Electronics and Information Technology (MeitY) will ensure that only these whitelisted apps are hosted in app -stores. The RBI will also be responsible for overseeing mule or rented accounts that may be funnels for money laundering. Accordingly, it will be necessary to review or cancel dormant Non Banking Financial Companies (NBFC) to prevent abuse.

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