RBI to Launch Public Repository for Digital Lending Apps

On 8th August, 2024, the Reserve Bank of India (RBI) announced that it will create a public repository of digital lending apps (DLAs) to help customers verify their association with regulated entities and avoid illegal apps.

Key Points

Repository Details: The repository will list DLAs associated with regulated entities such as banks, based on data submitted directly by these entities. It will be updated regularly and accessible on the RBI’s website.
Purpose: This initiative aims to help borrowers identify whether a lending app is legitimate or illegal.
Background: The RBI's guidelines on digital lending, issued on September 2, 2022, address customer protection, data privacy, interest rates, and recovery practices.
Despite these guidelines, reports suggest that some unscrupulous players falsely claim affiliation with regulated entities.
Illegal Apps: An RBI Working Group found that about 600 out of 1,100 lending apps available on Indian Android devices are illegal. The growing number of lending apps makes it challenging for users to verify their legitimacy.
Future Challenges: The rise in copycat apps and websites is anticipated. The working group has proposed stricter regulations and separate legislation to combat illegal digital lending activities.
Victim Impact: In the past five years, many individuals have suffered from predatory loan apps, including cases of extortion and harassment. The RBI’s September 2022 guidelines aim to mitigate these unethical practices.