NEW DELHI, Dec 27 : The government has directed social media and other online platforms to ensure that they do not host advertisements of fraudulent loan apps, Union Minister Rajeev Chandrasekhar said on Wednesday.
Chandrasekhar said the IT ministry has made it clear to platforms that they cannot carry advertisements of fraudulent and illegal loan apps as they are misleading and exploiting people who are using the internet.
“One of the areas we are now cracking down on is advertising of fraudulent loan apps that many platforms are carrying and we have, through yesterday’s advisory, made it clear that no intermediary can carry advertisements of fraudulent loan apps because it will be misleading and exploits people who are using the internet,” the Minister of State for Electronics and IT said on the sidelines of an event.
Concerns are growing over illegal instant loan apps that have come up in recent times. These fraud loan apps — which lend small amounts to desperate borrowers at exorbitantly high interest rates and often resort to harassment, even blackmailing later — are flourishing, and are openly being advertised on online platforms.
In the advisory issued on Tuesday, the IT Ministry directed that “intermediaries and platforms should take additional measures to not permit any advertisements of illegal loan and betting apps having the potential to scam and mislead the users, the consequences of which will be the sole responsibility of the intermediaries and platforms”.
The advisory also stressed the importance of robust grievance redressal mechanisms employed by intermediaries.
In a meeting convened in October 2023, the IT Ministry and the Reserve Bank of India (RBI) discussed the necessary actions against illegal betting apps.
During this meeting, the ministry urged the RBI to devise a more comprehensive Know Your Customer (KYC) process for banks. This proposed KYC process, termed ‘Know Your Digital Finance App’ (KYDFA), is envisioned to enhance the ability to trace and address rogue loan apps effectively.
This recommendation was officially communicated to the Department of Financial Services (DFS) and RBI on October 13, 2023.
At the time Chandrasekhar had said: “We have recommended the RBI, within their regulatory framework, to design a detailed KYC for companies, which we refer to as Know Your Digital Finance App (KYDFA), in the same manner that customers have to undergo detailed KYC for opening a bank account.”
This, he had said, will “ensure that only legitimate and scrutinised financial apps can access and use the Indian banking system and further, if there is any violation of law, the KYDFA process will help in establishing traceability and origin of the app for action under the law.”
Earlier this month, the government informed Parliament that Google has suspended or removed over 2,500 fraudulent loan apps from its Play Store between April 2021 and July 2022.
The government is constantly engaged with the RBI and other regulators and stakeholders concerned to control fraudulent loan apps, Finance Minister Nirmala Sitharaman had said in a written reply to the Lok Sabha this month.
As part of steps taken to control fraudulent loan apps, she said, the RBI has shared a ‘whitelist’ of legal apps with the Government of India, and this list was shared by the Ministry of Electronics and Information Technology (Meity) with Google, whose app store is the primary source of distribution of digital lending apps.
Between April 2021 and July 2022, Google also reviewed approximately 3,500 to 4,000 loan lending apps and suspended or removed over 2,500 fraudulent loan apps from its Play Store.
Meanwhile, Chandrasekhar hit out at Congress leader Sam Pitroda’s reported remarks that Ram Mandir wasn’t the real issue. He said Pitroda was a good example of “how far moved Congress is from the psyche of India, and from the soul of India.”
“During UPA when Sam Pitroda was a powerful man and he was heading PM’s innovation council the 2G scam happened then and he was silent about that. When there were almost 8-9 quarters of successive inflation and drop in growth in investments during UPA, Pitroda said people should bear the price rise…,” Chandrasekhar said. (PTI)
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