„The Minister of Finance expressed concern about the increase in cases of illegal credit applications offering loans/microcredits, especially for vulnerable and low-income people at exorbitant interest rates and processing/hidden fees, as well as predatory collection practices such as extortion, criminal intimidation, etc.,” the ministry said today. Amid concerns about the increase in cases of money laundering, tax evasion and criminal intimidation by illegal credit apps, especially against low-income people, the government has asked the Reserve Bank of India (RBI) to create a „white list” of legal digital credit apps to approve in app stores. „We then arrested 24 people across the country,” Prasad said. We searched nine call centres in Hyderabad, Bengaluru and Delhi. They used Chinese identity theft apps to make the calls. These were internet calls, but for the victims they appeared to be normal calls from a mobile phone. It is high time this harassment was taken seriously. The task force`s RBI report „Digital loans, including loans through online platforms and mobile apps” called these credit apps illegal and said the central bank would soon develop digital credit standards to combat app-related financial fraud. He stressed that such applications would be advertised under the names of existing and credible authorities.
Last month, for example, a group posing as the Mananthavady Cooperative Farmers Society online encouraged users to download malicious apps. „They use credible names to deceive people, and they claim to have an NBFC license,” Harikumar said. In India, we still don`t have a regulator to report this type of data theft. This cannot only be solved with technical expertise. A mix of technology, policy and government intervention is needed.â The Reserve Bank of India (RBI), the country`s central bank and a major financial regulator, says nearly 600 of the roughly 1,100 digital credit applications that operate across the country are illegal. It says it received nearly 8,000 complaints about digital loans from banks and „non-bank financial corporations” in the last fiscal year. „These standards will certainly prevent our customers from falling victim to fraudulent lenders. But when it comes to finding a loan, when the need for money can be urgent, borrowers should spend a few minutes figuring out if the app that promises instant money is a registered lender or if it`s an unauthorized business doing illegal business,” Shukla says. [It will help] raise awareness of these apps” and the problems they bring, she said. The Reserve Bank of India, the country`s central bank, will create a „white list” of all legal applications, and the country`s IT ministry will ensure that only whitelisted apps are hosted in app stores, the Treasury Ministry said in a statement.
The government has also asked the Reserve Bank of India to monitor accounts that can be used for money laundering, as well as review and, if necessary, cancel dormant shadow bank licenses that can be abused by credit applications. „Steps should be taken to increase cybersecurity awareness among customers, bank employees, law enforcement and other stakeholders. All ministries/agencies must take all possible measures to prevent the operation of such illegal credit applications,” the Ministry of Finance said. An analysis of the Mobile Security Framework, a tool for testing app security, found that when users install credit apps such as Rupeeway, Smart Pokket, and Tytocash, they tend to automatically grant those apps permission to access contact information or even take photos and videos with the phone`s camera — although some of those permissions aren`t required for those permissions to the application works. Dozens of credit apps have grown like mushrooms in India in recent quarters, with many offering customers loans with no credit score and bad savings, and later using unethical ways to get their money back. The country`s law enforcement agencies have made hundreds of arrests following complaints of alleged abuse and harassment from agents collecting refunds on behalf of credit applications. Aravind is one of „at least 64 people” across India who committed suicide last year after being threatened and humiliated by online lending apps, according to cybersecurity expert Pravin Kalaiselvan. In May, Sandeep Koregaonkar, 38, based in Malad, committed suicide. Morphic photos of him had been sent to his colleagues, friends and relatives after downloading a credit app, the Times of India reported.
The measures taken by the government come after illegal credit apps hosted in app stores were discovered that offer microcredits to people affected by the pandemic and low-income groups at exorbitant interest rates, as well as hidden and processing fees and the use of predatory recovery practices. „There should be [stricter] laws for illegal digital money lending applications, and scammers should be arrested under strict laws,” Jethwa said. Sujay in Odisha said he used a credit app called Kash Loan to borrow Rs 1.3 lakh. When he didn`t refund, he added, a message was sent to his contacts. The task force was established in the context of business practices and customer protection concerns arising from the rise of digital lending. More than 200 apps have already been removed from the Google Play Store due to policy violations or other legal issues. Delhi police arrested five people in July who they said were involved in an unauthorized Chinese microfinance company that had committed credit app scams. The central bank has been asked to create a list of legal digital credit apps, while the government will help ensure that only those apps lend, he said. India plans to dictate which credit apps are allowed in the country`s app stores, the latest in a series of recent moves by the world`s second-largest internet market to crack down on summary and unethical lenders.
„I told them I would pay within two or three days,” Sinhaa said, adding that she didn`t have the money to repay. So she took out a loan of about Rs 8,000 from another credit application. The report suggests that there will be separate legislation to prevent illegal digital credit activities.