Lok Sabha Question No. 3318 (UNSTARRED), answered on 2022-03-23
Subject: Fraud Transaction
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Maddila  Gurumoorthy, Goddeti Madhavi, M V V Satyanarayana

## GOVERNMENT OF INDIA

## MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED  QUESTION NO.3318

TO BE ANSWERED ON 23.03.2022

## FRAUD TRANSACTIONS

## 3318. SHRI MADDILA GURUMOORTHY: SHRIMATI GODDETI MADHAVI: SHRI M.V.V. SATYANARAYANA:

Will the Minister of ELECTRONICS AND INFORMATION TECHNOLOGY be pleased to state:

- (a) whether the Government is aware of the RBI Working Group report that more than 600 illegal loan apps have been operating in India and are available on several app stores for Android users;
- (b) if so, the details thereof;
- (c) whether the Government is taking any steps to prevent fraudulent transactions on abovesaid apps which are mostly used to dupe innocent people; and
- (d) if so, the details thereof?

## ANSWER

## MINISTER OF STATE FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI RAJEEV CHANDRASEKHAR)

(a)and (b):  As per the report of Reserve Bank of India (RBI) Working Group on Digital Lending, there were approximately  1,100  lending  apps  available  for  Indian  Android  users  across  80+  application  stores  (from January 01, 2021 to February 28, 2021). Details, as mentioned in the said Report, are as under:

| No. of App Stores in which Indian loan apps are available                                   | ~81    |
|---------------------------------------------------------------------------------------------|--------|
| No. of unique Indian loan apps that have the keywords: loan, instant loan, quick loan, etc. | ~1,100 |

(c) and (d):The Government of India is taking several steps to ensure safe and secure functioning of digital payment ecosystem.

- (i) 'The  Information  Technology  Act,  2000'  includes  appropriate  provisions  for  customer  protection,  as given below:
-  Section 79 of The IT Act, while providing exemption to the Intermediary also requires due diligence to be followed by them. The App stores are Intermediary within the definition of The IT Act and are expected  not  to  allow  any  illegal  activity  on  their  platform.  As  per  the  'Information  Technology (Intermediary  Guidelines  and  Digital  Media  Ethics  Code)  Rules,  2021'  issued  on  25 th February 2021, the App Stores are expected to take down these apps or any other illegal content/ activity/
- information on their platforms as and when brought to their knowledge through a court order or on notice by an appropriate Government or its authorised agency.
-  Section 69A of The IT Act includes provisions for the Government to block access of information under certain conditions impacting sovereignty and integrity of India, security of State, defence of India, friendly relations, Public Order or for a cognizable offence relating to the above, following the well laid down rules.
- (ii) The Reserve Bank of India (RBI) has taken various steps to address the issues concerned with digital lending apps. Summary of measures adopted by RBI to address concerns pertaining to Digital Lending is attached at Annexure-1.

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Annexure-1

## Summary of Measures adopted by RBI to address concerns pertaining to Digital Lending

1. Instructions  have  been  issued vide circular  dated  June  24,  2020,  to  all  Scheduled Commercial  Banks  (excluding  RRBs)  and  NBFCs  (including  HFCs)  to  adhere  to  Fair Practices  Code  and  Outsourcing  Guidelines  for  loans  sourced  over  digital  lending platforms either through their own or under an outsourcing arrangement.
2. The list of banks/registered NBFCs is published on the official website of the Reserve Bank. Wherever banks and NBFCs engage digital lending platforms as  their agents to source borrowers and/ or to recover dues, they have been advised, among other things, that they should: a) disclose the names of digital lending platforms engaged as agents on their website b) direct digital lending platforms engaged as agents to disclose upfront to the  customer,  the  name  of  the  bank/  NBFC  on  whose  behalf  they  are  interacting  with him.
3. RBI, vide press release dated December 23, 2021, had cautioned the general public not to fall prey to unscrupulous activities of unauthorised digital lending platforms/Mobile Apps and verify the antecedents of the company/ firm offering such loans. It had highlighted reports on excessive rates of interest and additional hidden charges being demanded from borrowers; adoption of unacceptable and high-handed recovery methods; and misuse of agreements to access data on the mobile phones of the borrowers by these lenders.
4. RBI had also written letters to Chief Secretaries of all States/UTs highlighting the need for proactive action against unauthorised digital lending platforms/Mobile Apps in view of the concerns mentioned above. Further, a letter to the Ministry of Finance (MoF) dated January 14, 2021, also highlighted the need for coordinated action against unauthorised Digital  Lending  platforms/Digital  Apps  by  State  Law  Enforcement  Agencies  (LEAs). The  issues  related  to  digital  lending  platforms/Mobile  Apps  are  also  discussed  in  the meetings of State Level Coordination Committees (SLCC).
5. The Financial Literacy  Week (February 8-12, 2021) with the theme 'Credit Discipline and  Credit  from  Formal  Institutions',  focussed  on  responsible  borrowing,  borrowing from formal institutions and timely repayments. Further, a centralised campaign on mass media  and  social  media  was  also  undertaken  during  February  2021  to  disseminate awareness on the theme.
6. ********