Lok Sabha Question No. 2248 (UNSTARRED), answered on 2024-12-09
Subject: Exploitation by Unauthorised Loan Apps
Ministry: FINANCE
Asked by: Smt. Sajda Ahmed

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO: 2248

ANSWERED ON THE MONDAY, 9 DECEMBER, 2024/18 AGRAHAYANA, 1946 (SAKA)

## EXPLOITATION BY UNAUTHORISED LOAN APPS

## 2248. SMT. SAJDA AHMED:

Will the Minister of FINANCE be pleased to state:

(a) whether the Government is aware of the increasing presence of digital lending platforms and the exploitation of individuals through these platforms;

(b) the steps taken by the Government to regulate digital lending platforms and prevent operating of unauthorised loan apps;

(c) whether the Government has any plans to establish a comprehensive regulatory framework to oversee digital lending platforms; and

(d)  the  measures  implemented  by  the  Government  to  protect  citizens  from  exploitation  by unauthorised loan apps?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (SHRI PANKAJ CHAUDHARY)

(a) and (b):  The Government is constantly engaged with Reserve Bank of India (RBI) and other concerned Regulators/stakeholders with the objective to control the unauthorized loan apps. RBI issued  regulatory  guidelines  on  digital  lending  vide  circular  dated  02.09.2022,  which  aims  at enhancing  customer  protection  and  making  digital  lending  ecosystem  safe  and  sound.  These guidelines also have detailed provision regarding recovery, data privacy, and customer grievance redressal measures for REs and their agents, who are operating under an outsourcing arrangement with the RE. The Guidelines mandate Regulated Entities (REs) i.e. Banks/NBFCs to ensure that the Lending Service Providers (LSPs) engaged by them and the Digital Lending Apps (DLAs) shall comply with the guidelines contained therein.

(c)    To encourage self-regulation in the FinTech sector, including lending segment, RBI issued the 'Framework for Self-Regulatory Organisation(s) in the FinTech Sector' (SRO-FT framework) on 30.05.2024 and invited applications for recognition as SRO-FT. The Fintech Association for Consumer Empowerment (FACE) is the first SRO-FT recognised by RBI on 28.10.2024.

(d)  The Government and RBI have been taking various initiatives from time to time to protect citizens from exploitation by unauthorized loan apps. These inter-alia, includes:

(i) Proactively engaging with the major internet intermediaries and messaging platforms to review the operations of unauthorised loan apps.

(ii) Indian Cyber Crime Coordination Centre (I4C), Ministry of Home Affairs (MHA) has been proactively analysing the digital lending apps. In order to facilitate the citizens to report  cyber  incidents  including  illegal  loan  apps,  MHA  has  launched  a  National

Cybercrime Reporting Portal (www.cybercrime.gov.in) as well as a National Cybercrime Helpline number '1930'.

(iii) RBI and Banks have been taking up awareness campaigns through short SMS, radio campaign, publicity  on  prevention of  'cyber-crime'. Further, RBI has been conducting electronic-banking  awareness  and  training  (e-BAAT)  programmes  which  focuses  on awareness about frauds and risk mitigation.

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