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Over 600 illegal loan lending apps available on different App stores in India: RBI report

Over 600 illegal loan lending apps available on different App stores in India: RBI report

The Reserve Bank of India (RBI) had constituted a Working Group (WG) on digital lending on January 13, which has now termed 600 apps as “illegal loan apps.” The WG has studied all aspects of digital lending activities in the regulated financial sector as well as the unregulated sector to come to this conclusion. The report has added that most of these apps are used to dupe unsuspecting people, and are available on several app stores for Android users in the country.

According to the WG’s report, there are approximately 1100 lending apps available for Android users in India across over 80 app stores. The report consists of data from January 1 to February 28.

“Number of App Stores in which Indian loan apps are available (81), number of unique Indian loan apps that have the keywords: loan, instant loan, quick loan, etc. (1100), number of illegal loan apps (600),” the report added.

Some of the concerns raised by the WG are as follows:

  • Inadequate transparency about information collected from users and how it is going to be used.
  • No option for users to manage and or delete their personal data after the loan has been paid off.
  • Most of the apps do not disclose their partner banks or Non-banking Financial Company (NBFC) partners.
  • The companies make use of recovery agents who take advantage of the borrowers’ phone contacts, photos, or any other sensitive data to harass them.

The WG was set up because RBI has been receiving an increasing number of public complaints against digital lending apps on its Sachet portal, where the public can register its complaints. It has stated that it got around 2,562 complaints between January 2020 to March 2021. Out of these, the majority of the complaints were against lending apps promoted by entities not regulated by RBI. Most of these complaints were received from Maharashtra, followed by Karnataka, Delhi, Haryana, Telangana, Andhra Pradesh, Uttar Pradesh, West Bengal, Tamil Nadu and Gujarat.

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