RBI plans to curb scams by creating a repository for lending apps

The Reserve Bank of India (RBI) intends to establish a public repository for digital lending applications. The new repository will function as a database for authorised digital lending apps.

This proposal will assist borrowers in identifying legitimate platforms and avoiding unauthorised or fraudulent ones. Moreover, one of our researchers here at iZOOlogic explained that the surge of illegal Chinese lending apps in India caused widespread scams and extortion, which has fueled RBI to address the situation through this proposed repository.

 

RBI announced that regulated firms should immediately adopt this new system.

 

RBI stated that regulated firms should update the repository immediately with facts regarding new or withdrawn digital lending applications to ensure that the information is current and accurate.

Governor Shaktikanta Das reported this plan on August 8, 2024, when the RBI Monetary Policy Committee’s recommendations were announced. The RBI governor remarked that the institution has taken various initiatives to ensure the orderly development of India’s digital lending industry.

To support this strategy and address difficulties related to illegal digital lending applications, the RBI suggests establishing a public library of digital lending apps deployed by regulated firms.

Authorised organisations will use the repository to report and update information about their digital lending applications. According to the governor, this will assist customers in identifying unauthorised lending apps.

This new proposal will appeal to lending companies, financial institutions, and users as it will dramatically reduce the risks of fake loan apps. It is also an initiative to help consumers identify phoney apps and encourage them to use only legitimate and authorised digital lending apps.

Furthermore, only regulated entities will be permitted to report and update information about the digital lending apps whose services they use. Hence, this repository will not include unregulated digital lending apps or do not partner with regulated businesses.

These new features increase the repository’s reliability and add additional checks and balances to ensure that only legitimate digital lending apps join the repository. Still, users of these lending apps must always be cautious when accessing them as threat actors could still use various techniques that would allow them to impersonate authorised applications soon.