New Delhi, December 2023 – The Indian government has taken a stringent stance against the proliferation of fraudulent loan apps, instructing social media and other online platforms to cease hosting advertisements for these apps. Union Minister Rajeev Chandrasekhar, representing the Ministry of Electronics and Information Technology, announced this directive, highlighting the government’s commitment to cracking down on fraudulent online activities.
These loan apps, known for offering instant loans with exorbitant interest rates, have been a growing concern due to their predatory practices, including harassment and blackmail of borrowers. This move by the government is part of a broader initiative to ensure a safe and trusted internet environment. The IT Ministry’s advisory, issued recently, specifies that intermediaries and platforms are responsible for preventing advertisements of these illegal loan and betting apps, warning that any failure to comply would result in them bearing the consequences.
In an effort to further combat this issue, the Ministry, in collaboration with the Reserve Bank of India (RBI), has been discussing the implementation of a more comprehensive Know Your Customer (KYC) process, termed ‘Know Your Digital Finance App’ (KYDFA). This enhanced KYC is designed to help trace and address rogue loan apps more effectively. The recommendation for this KYC process was communicated to the Department of Financial Services (DFS) and RBI in October 2023.
This decisive action is a clear indication of the government’s resolve to protect citizens from digital financial frauds and to ensure that only legitimate and scrutinized financial apps have access to the Indian banking system. The ongoing efforts to establish a more robust regulatory framework reflect the commitment to safeguarding the interests of internet users in the country.