Lending Transparency | Trade Standard Editorials

There are pros and cons of the Reserve Bank of India (RBI) undertaking a ‘loan application’ verification exercise. The central bank is obviously the agency responsible for verifying whether a given application complies with the rules and regulations established in this regard. But if poorly managed, it can be a potential barrier to competition. Union Finance Minister Nirmala Sitharaman has asked the RBI to vet digital loan applications and compile a ‘whitelist’. The Ministry of Electronics and Information Technology (MEITY) has been asked to coordinate with the RBI and service providers such as Google Play and Apple App Store to ensure that only lending apps listed on the RBI whitelist are available for download. Ministry of Finance concerns include applications offering loans to vulnerable, tech-illiterate and low-income groups at exorbitant interest rates with hidden processing fees and charges. Lenders also use predatory loan collection practices involving blackmail and criminal intimidation. Additionally, there is the possibility of money laundering and tax evasion.



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First published: Sunday, September 11, 2022. 9:05 p.m. IST

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