RBI to launch repository of digital lending apps to help users identify legitimate lenders
The repository will have details of services provided by authorised digital lenders through their apps.
The Reserve Bank of India is set to release a public repository of authorised digital lending apps to curb problems arising from fraudulent loan applications, RBI Governor Shaktikanta Das said, at the Monetary Policy Meet, on Thursday.
"For the orderly development of the digital lending ecosystem in India, and to address the problems arising from unauthorised digital lending apps, the Reserve Bank proposes to create a public repository of digital lending apps deployed by the regulated entities," Das said.
The repository will have details of services provided by authorised digital lenders through their apps.
In 2022, the RBI shared a whitelist of legitimate lending apps with the Indian government. Apps not included on this list were targeted for removal from platforms such as Google Play Store.
These illegal lending apps, apart from having predatory interest rates, often employ unethical methods for loan recovery, including harassment, intimidation, and blackmail. Media reports indicate that borrowers face severe harassment from agents, with instances of threats involving personal data, such as intimate photographs, which are used to coerce repayment.
A recent report by Fintech Association for Consumer Empowerment revealed that one-third of customers in India, despite having high confidence, possess limited knowledge about their digital loans and are unaware of how to identify illegal lending apps.
About 70% of the users felt confident verifying the loan apps despite following a sub-optimum verification process, according to the report.
The share of fintech loans is gradually raising in the personal loan market. Digital lenders have seen a two-fold rise in share in sanction value and volume since FY18-19, the report said.
Edited by Swetha Kannan