The State Government has asked the Reserve Bank of India to establish a market surveillance mechanism to identify illegal loan apps which are functioning in violation of RBI guidelines so that action can be initiated against them.
“Many loan apps exist in Google Play Store against RBI guidelines. They are not disclosing the names of associated non-banking finance companies (NBFCs),” the Government said in a representation submitted to the RBI. The complaint follows increasing crimes related to loan apps in the State and the State said from 61 cases reported in the National Cyber Crime Reporting Portal in 2021, the number increased to 900 this year with 107 FIRs filed and eight persons committing suicide.
A detailed analysis by the Finance department on the frauds reported identified 213 loan apps and 80 NBFCs associated with them. Among these NBFCs, 33 were identified as registered with the RBI and the rest were not. “Also many apps have not displayed any NBFC details and could not be established through our analysis based on available data,” Finance Special Chief Secretary K. Ramakrishna Rao said in the memorandum submitted to RBI.
Some loan apps were misusing the names of NBFCs though they were not actually associated with the latter. The RBI should accordingly publish the list of NBFCs and the associated loan apps in the website and keep updating it in real time. This would help the public as well as law enforcement agencies to identify unscrupulous apps in the market.
Many NBFCs were violating RBI norms in that they were not having office at the declared address and not having customer grievance redressal mechanism which was in violation of the RBI norms. The Apex Bank should accordingly initiate action to cancel the registration of such NBFCs. Steps should be taken to ensure that illegal digital money lending platforms clearly disclosed the associated bank/NBFCs prominently upfront to the customers as also the grievance redressal mechanism. “Also they should display clearly the nature of user data they capture and also the privacy policy,” the department said in the memorandum submitted during the recent state finance secretaries’ conference.
