IT, Home Ministries and RBI to decide on steps post loan app ban; fintech firms seek clarity
Founders of several lending platforms met officials of the Ministry of Electronics & Information Technology (MeitY) in New Delhi on Tuesday, people who attended these meetings said, a day after internet service providers started taking down websites of online lending companies.
Representatives from fintech and lending firms sought to clear the air from various departments on why the blocking order was issued.
Some of these meetings were one-on-one between the impacted fintech apps and the ministries concerned, a person directly aware of the discussions told ET.
ET was the first to report on Monday that the government order banning 94 lending apps on Sunday also included apps of Indian firms.
Separately, in a written response to a question in the Rajya Sabha on digital lending apps, the finance ministry said on Tuesday that RBI had furnished a list of digital lending apps used by regulated entities (of RBI) to MeitY, which in turn, has shared the list with respective intermediaries (app stores).
Discover the stories of your interest
Also read | MeitY ban on loan apps includes non-Chinese players like PayU’s LazyPay, Kissht MeitY has requested these intermediaries to ensure that “only the apps figuring in the list” (which are used by regulated entities) should be hosted on their app stores.
In September, the finance ministry had said that the RBI would prepare a “whitelist” of all the legal apps and MeitY would ensure that only these are hosted on app stores.
The finance ministry also told the Parliament that the Directorate of Enforcement (ED) has initiated several cases under the Prevention of Money Laundering Act (PMLA) where the proceeds of crime has been generated and acquired by accused persons or entities through illegal loan apps.
In these cases, the government stated that as of February 7, proceeds of crime of approximately Rs 2,116 crore have been identified, out of which proceeds of crime amounting to Rs 859.15 crore have been attached, seized, or frozen under PMLA provisions. Further, assets amounting to Rs 289.28 crores have been seized under provisions of Foreign Exchange Management Act, it added.
Ban categories
A source in the government said that the ban was on account of three broad categorisations — first, the list of apps include those that may have ultimate or partial ownership with Chinese entities; second, lending apps which are not regulated by the RBI and which may be storing data in Chinese servers, and lastly, apps being run by companies against which customer complaints of recovery harassment have been made.
A list of apps and portals seen by ET for which the ban order has been issued includes LazyPay, Ola-owned Avail Finance, Indiabullshomeloans.com, Faircent, Kissht, and others.
“We met MeitY officials today in New Delhi as there was a potential chance of other platforms getting banned. For now, we are told RBI, MeitY and the home ministry will consult among themselves, and also seek relevant documents from us,” one of the sources who attended the meeting said.
According to this person, the process may take two or three days more before the issue is resolved.
Typically, MeitY sends orders to internet companies and app store operators to block websites or apps upon receiving a directive from the Ministry of Home Affairs.
In the latest case, the RBI has also been brought into the loop since some of the apps that are to be blocked are operated by companies regulated by the central bank.
Consultations
Over the next couple of days, RBI is also expected to hold discussions with the ministries and share additional views on the lending apps, which are regulated by the banking regulator, sources said.
“Some of the lending entities in the list also own systemically important new-age NBFCs, which is why RBI also needs to be consulted,” said a second person who was aware of the discussions.
In addition to the internet service providers, the order was also sent by MeitY to Google, which runs the Google Play Store, to take down the apps.
ET has learnt, through sources, that while Google has received the order, it is conducting a thorough review of the apps mentioned in the list before restricting them from its app store.
The search behemoth is also in consultation with MeitY to seek more clarifications on the final list of apps to be banned, sources added.
“As of today, we as an association have not received any formal communication from MeitY on restricting any digital lending app or any warning on any fraudulent practices. We are in the process of collating information from our members and other industry associates about the details,” said a spokesperson for Digital Lenders Association of India (DLAI). “We will approach MeitY and other relevant authorities to understand the matter in detail and implement requisite action points if required.”
DLAI members include ZestMoney, Moneyview, KreditBee, among others.
E-mail queries sent to MeitY, the home ministry, and the RBI went unanswered.
A Google spokesperson also did not reply to a request seeking comment, as did Avail Finance and Indiabulls Home Loans.
“There has been confusion since yesterday about which apps will finally be banned, and different sets of founders have approached MHA, RBI and MeitY today to get an understanding on the issue. The digital fintech players are awaiting the final list now […] Google is also in consultation with MeitY on the final list,” one of the fintech founders who was present at the meetings said.
A spokesperson for Kissht said its app is currently operational across the country.
“While we haven’t received any formal notification on the status of our app, we are aware of the development and are seeking clarity from the concerned authorities. We are hopeful that this will be resolved soon without interrupting services for our existing users,” the spokesperson said.
For all the latest Technology News Click Here
For the latest news and updates, follow us on Google News.