There are pros and cons to the Reserve Bank of India (RBI) undertaking an exercise of vetting “loan apps”. The central bank is obviously the agency to check if a given app complies with rules and regulations set in this regard. But if poorly handled, this may raise a possible barrier against competition. Union Finance Minister Nirmala Sitharaman has asked the RBI to check digital loan apps and compile a “whitelist”. The Ministry of Electronics and Information Technology (MEITY) has been asked to coordinate with the RBI and service providers such as Google Play and Apple App Store to ensure that only loan apps on the RBI whitelist are available for download. The finance ministry’s concerns include applications offering loans to vulnerable, tech-illiterate people, and low-income groups at exorbitant interest rates with hidden processing fees and charges. Lenders also use predatory loan recovery practices involving blackmailing and criminal intimidation. In addition, there is the possibility of money laundering and tax evasions.
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First Published: Sun, September 11 2022. 21:05 IST