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Govt cracks down on illegal loan apps; RBI to prepare a ‘white list.

Finance minister Nirmala Sitharaman asked the Reserve Bank of India (RBI) to prepare a so-called approved; white list of digital lending apps to stamp out those using unethical means to exploit vulnerable customers. The ministry of electronics and information technology will ensure that only apps on the approved list are hosted on app stores, the finance ministry said in a statement. The finance minister expressed concern about increasing instances of illegal loan apps offering loans/micro-credits; especially to vulnerable and low-income group people at exorbitantly high-interest rates and processing/hidden charges. And predatory recovery practices involve blackmailing and criminal intimidation.

The government’s decision in a meeting held came after the RBI last month issued guidelines for digital lending platforms.

The government’s decision in a meeting held came after the RBI last month issued guidelines for digital lending platforms; to protect borrowers following complaints that lending apps were charging usurious rates, pursuing aggressive recovery practices, and committing fraud. The meeting, attended by secretaries from the finance, corporate affairs; and information technology ministries, along with RBI officials, follows increasing concerns over illegal mobile-based loan apps. Sitharaman also noted the possibility of money laundering; tax evasion, breach of data privacy, and misuse of unregulated payment aggregators; shell companies, and defunct non-banking financial companies (NBFCs) for perpetrating such actions

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