MHA asks states to take action against money lending apps

The ministry of home affairs has asked all states and central agencies to take strict action against predatory lending apps, mostly Chinese-controlled, which use harassment, blackmail and other harsh practices of debt recovery.

The lenders use confidential personal data like contacts, location, photos and videos to blackmail and harass borrowers. The ministry has issued a letter to all state governments, Union territory administrators and federal agencies such as the CBI and the NIA.

The letter further said that these illegal lending apps that may not be Regulated Entities (RE) by RBI are using bulk SMS, digital advertisement, chat messengers and mobile app stores on a massive scale. The borrower has to provide mandatory access to contacts, location, and phone storage in order to avail loans.

This issue has caused a serious impact on national security, economy and citizen safety. The data is misused to harass and blackmail the citizens using morphed images and other abusive practices by recovery agents located in India as well as overseas violating RBI’s Fair Practices Code.

A large number of Chinese-controlled loan apps have been found to be indulging in predatory lending in the recent past. The Enforcement Directorate has already investigated some apps in the last one year. In addition to indulging in unethical operations, these apps utilise loopholes in the regulations and often operate in violation of existing rules and regulations, said an ED official.

The MHA said that the investigation has revealed this organised cybercrime is executed using disposable emails, virtual numbers, mule accounts, shell companies, payment aggregators, API services (account validation, document verification), cloud hosting, cryptocurrency, etc. Hence, it is advised to involve domain experts during an investigation.