In a significant move, the Indian government has intensified its efforts to tackle the menace of fraudulent loan apps that have exploited people, especially during the Covid-19 pandemic. Union Minister Rajeev Chandrasekhar emphasized that the Ministry of Information Technology has issued a clear directive to all online platforms, including social media, to refrain from hosting advertisements of deceptive and illegal loan apps.
Crackdown on Misleading Ads:
The government’s crackdown specifically targets the advertising of fraudulent loan apps on various online platforms. It aims to curb misleading practices and exploitation of individuals who seek financial assistance online. The move comes amid rising concerns over the surge in loan and betting apps, which proliferated during the pandemic.
Google’s Action Against Fraudulent Loan Apps:
Highlighting the severity of the issue, the government informed Parliament that Google took substantial action by suspending or removing more than 2,500 fraudulent loan apps from its Play Store. This action, carried out between April 2021 and July 2022, underscores the need for a robust response to protect users from potential scams.
Advisory to Online Platforms:
The Ministry of Information Technology issued a crucial advisory urging online platforms to take additional measures to prevent the promotion of illegal loan and betting apps. The advisory places the responsibility on intermediaries and platforms for the consequences of hosting such misleading advertisements. It also emphasizes the need for effective grievance redressal mechanisms to address user concerns.
Concerns Over Exploitative Practices:
During the Covid-19 pandemic, many individuals facing financial difficulties turned to these apps for quick loans. However, reports surfaced of some loan apps engaging in exploitative practices, including lending money at exorbitant interest rates and resorting to harassment and blackmail for repayment.
Government-RBI Collaboration:
The advisory comes two months after a meeting between the Ministry of Information Technology and the Reserve Bank of India (RBI) to discuss actions against illegal betting and loan apps. In October, the ministry recommended that the RBI implement a more comprehensive ‘Know Your Customer’ (KYC) process for banks, emphasizing the need for stricter regulations.
Government’s Ongoing Efforts:
Union Finance Minister Nirmala Sitharaman revealed that the government maintains constant engagement with the RBI and other regulators to control fraudulent loan apps. The RBI has even shared a ‘whitelist’ of legal apps with the government, underscoring the collaborative efforts to combat the issue.
Conclusion:
The government’s proactive measures and the collaboration with regulatory bodies demonstrate a commitment to protecting citizens from deceptive loan apps. The warning to online platforms serves as a crucial step in curbing the spread of misleading advertisements and ensuring a safer online environment for individuals seeking financial assistance. As the government continues its crackdown, users are encouraged to exercise caution and remain vigilant when engaging with online financial services.
