FM asks financial sector regulators to take more steps to curb unauthorised lending apps

Finance Minister Nirmala Sitharaman on Wednesday asked financial sector regulators, including the Reserve Bank of India (RBI), to take further measures to check the spread of unauthorised lending through online apps.

Addressing the 28th meeting of the Financial Stability and Development Council (FSDC), Sitharaman also asked regulators to maintain constant vigil and be proactive towards detecting emerging financial stability risks, given the domestic and global macro-financial situation.

The FSDC deliberated on issues related to macro-financial stability and India's preparedness to deal with them, an official statement said after the meeting.

The ongoing inter-regulatory issues were also discussed to support GIFT IFSC in its strategic role to become one of the world's premier international financial centres and perform its envisioned role of facilitating foreign capital and financial services for the domestic economy, it said.

The FSDC discussed various issues related to the formulation of a strategy to implement the FSDC decisions and the Union Budget announcements.

These included prescribing uniform KYC norms, inter-usability of KYC records across the financial sector, and simplification and digitalisation of the KYC process; kickstarting fund-raising by social enterprises through social stock exchanges and arrest the harmful effects of unauthorised lending through online apps and measures to curb their further spread.

The government in December informed Parliament that Google had suspended or removed over 2,500 fraudulent loan apps from its Play Store between April 2021 and July 2022.

The objective is to remain proactive, maintain cyber security preparedness with constant vigilance, and take appropriate and timely action to mitigate any such vulnerabilities in the Indian financial system.

Fraudulent loan apps have defrauded many gullible borrowers of their money, leading to distress in many cases.

The FSDC members also decided to strengthen inter-regulatory coordination to further develop the financial sector so that it continues to provide the requisite financial resources for inclusive economic growth.

The FSDC also took note of the activities undertaken by the FSDC Sub-Committee chaired by RBI Governor Shaktikanta Das and the action taken by members on the previous decisions of the FSDC.

Besides Das, Securities and Exchange Board of India Chairperson Madhabi Puri Buch, Insurance Regulatory and Development Authority of India (IRDAI) Chairman Debasish Panda, Insolvency and Bankruptcy Board of India (IBBI) Chairman Ravi Mital, Pension Fund Regulatory and Development Authority Chairman Deepak Mohanty, and International Financial Services Centres Authority Chairman K Rajaraman also attended the meeting.

Senior officials, including Finance Secretary T V Somanathan, Department of Economic Affairs Secretary Ajay Seth, Department of Financial Services Secretary Vivek Joshi, and Revenue Secretary Sanjay Malhotra also attended the meeting.