Lok Sabha Question No. 3856 (UNSTARRED), answered on 2025-03-24
Subject: Banning Unlawful Lenders
Ministry: FINANCE
Asked by: Shri G Kumar Naik

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO:3856

ANSWERED ON THE MONDAY, 24 MARCH, 2025/ 3 CHAITRA, 1947 (SAKA)

## BANNING UNLAWFUL LENDERS

## 3856. SHRI G KUMAR NAIK:

Will the Minister of FINANCE be pleased to state:

- (a) the measures taken by the Government to curb the rise of unlawful lenders and unregulated digital lending platforms that exploit vulnerable borrowers;
- (b) whether the Government maintains the data on cases reported against illegal lending apps and loan sharks during the last five years and if so, the details thereof;
- (c)  the  details  of  legal  protections  are  in  place  for  borrowers  facing  threats,  harassment  or coercion from illegal lenders, particularly in rural and low-income communities;
- (d) the number of illegal digital lending Apps which have been banned or removed from App Stores in the country along with the criteria used for their removal; and
- (e) whether the Government is considering to introduce new Bills or amendments in existing laws to impose strict penalties on individuals and entities operating unlawful lending schemes?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a) to (d):  The Government has been constantly engaging with the Reserve Bank of India (RBI) and  other  concerned  Regulators/stakeholders  to  curb  the  operations  of  unregulated  digital lending  platforms  in  the  country.  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 mechanisms which are mandatory for the Regulated Entities (REs), the Lending Service Providers (LSPs) engaged by them and the Digital Lending Apps (DLAs). RBI has further issued the 'Framework for Self-Regulatory Organisation(s) in the FinTech Sector' (SRO-FT framework) on 30.05.2024 for establishing and  enforcing  regulatory  standards,  promoting  ethical  conduct,  ensuring  market  integrity, resolving disputes, and fostering transparency and accountability among its members.

Further,  Ministry  of  Electronics  and  Information  Technology  (MeitY)  issues  directions  for blocking  of  information,  including  fraudulent  loan  apps  under  Section  69A  of  Information Technology (IT) Act, 2000 after following the due process as provided in the Information Technology (Procedure and Safeguards for Blocking for Access of Information by Public) Rules, 2009.

To  address  the  emerging  harms  in  the  cyberspace  like  misinformation  &  deep  fakes, unregulated  lending  platforms  and  betting  apps,  etc.,  MeitY  has  issued  two  advisories  on 26.12.2023 and 15.03.2024 respectively which reinstated the obligations of the intermediaries under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 ('IT Rules, 2021').

(e): To curb unregulated lending activities and to protect the interest of consumers, RBI had constituted a Working Group on Digital Lending which suggested a set of measures, inter-alia including introducing legislation for banning of unregulated lending.

******