Transparency in Lending | Business Standard Editorial

There are pros and cons to the Reserve Bank of India (RBI) conducting a “loan app” review exercise. The central bank is obviously the body that checks whether a given app complies with the rules and regulations related to it. But if mismanaged, it can be a potential barrier to competition. Union Finance Minister Nirmala Sitharaman has asked the RBI to audit and “whitelist” digital lending apps. The Department of Electronics and Information Technology (MEITY) has been asked to coordinate with the RBI and service providers such as Google Play and the Apple App Store to ensure that only rental apps whitelisted by the RBI are available for download. Treasury Department concerns include applications offering loans at exorbitant interest rates with hidden processing fees and charges to vulnerable, tech-savvy people and low-income groups. Lenders also use predatory debt recovery practices that involve extortion and criminal intimidation. There is also the possibility of money laundering and tax evasion.



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Initial Release: Sun 11 Sep 2022. 21:05 IST

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