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India to decide which lending apps are allowed in app stores in latest crackdown

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India plans to determine which loan apps are allowed in app stores in the country, the latest in a series of recent moves from the world’s second-largest internet market to crackdown on sketchy and unethical lenders.

The Reserve Bank of India, the country’s central bank, will create a “whitelist” of all legal apps and the country’s ministry of IT will ensure that only whitelisted apps are hosted in app stores, the Ministry of Finance said in a statement.

The central bank will also monitor “mule” or “rented” accounts for money laundering and review and revoke licenses from non-bank financial institutions if found guilty, the Treasury Department said Friday.

Payment aggregators in the country are required to register within a certain time frame, and the Indian Ministry of Corporate Affairs will work to identify shell companies and revoke their registrations to prevent abuse.

In recent quarters, Indian authorities have taken strict action against credit apps that charge exorbitant fees and use unethical means to recover payments. India’s central bank said earlier this month it was making progress with new digital lending guidelines that would require companies to provide greater disclosure and transparency for the benefit of consumers, as well as restrict various business practices.

In India, dozens of credit apps have mushroomed in recent quarters, many offering loans to customers with no credit score and poor savings and later using unethical means to recover their money. Law enforcement agencies in the country have made hundreds of arrests over complaints of abuse and harassment of agents who collect repayments on behalf of loan apps.

Due to the psychological pressure built up by the predators behind these platforms, some individuals have also committed suicide, according to local media reports. While the latest step is aimed at limiting the availability of loan apps through app stores — a bold move, for sure — there are several such apps circulating outside of the app stores. These links are provided to customers through text messages and even through advertisements.

Google said last month it had blocked more than 2,000 unethical lending apps in India this year.

“The Treasury Secretary expressed concern about the increasing number of illegal loan apps offering loans/micro-credits, especially to vulnerable groups and low-income people at exorbitant interest rates and processing/hidden costs, and predatory blackmail recovery practices, criminal harassment etc,” the ministry said today.

“Smt. Sitharaman [Finance Minister] also pointed out the possibility of money laundering, tax evasion, data breach/privacy and misuse of unregulated payment aggregators, shell companies, defunct NBFCs etc. for committing such actions.

Apple and Google did not immediately respond to requests for comment.

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