India plans to mandate which loan apps are allowed on app stores in the country, the latest in a series of recent steps from the world's second largest internet market to crack down on bad loans.
The Reserve Bank of India, the country's central bank, will prepare a "whitelist" of all legal apps and the nation's IT ministry will ensure that only whitelisted apps are hosted on app stores.
The finance ministry said Friday that the central bank will review and cancel licenses of non banking financial institutions if they are found guilty of money-laundering practices.
India's Ministry of Corporate Affairs will work to identify shell companies and revocation of their registration if they are found to be involved in fraudulent activity.
The indian authorities have been cracking down on lending apps that use unethical means to collect payments. India's central bank said earlier this month that it was moving ahead with new guidelines for digital lending that will mandate firms to provide more disclosure and transparency to benefit consumers.
Scores of lending apps have mushroomed in India in recent quarters, many offering loans to customers without any credit score and with poor savings and later using unethical means to collect their money back.
In India, over 2,000 unethical lending apps have been blocked by the internet giant.
The ministry said that the Finance Minister expressed concern on increasing instances of Illegal Loan Apps offering loans/micro credits, especially to vulnerable and low-income group people at high interest rates and hidden charges.
It's Mister. For perpetrating such actions, Sitharaman noted the possibility of money laundering, tax evasions, breach/privacy of data, and misuse of unregulated payment Aggregators.
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