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Engage domain experts in probes into unregulated loan apps: Centre to states/UTs

New Delhi, Oct 30, 2022

Drawing “urgent attention” of all states and Union territories towards illegal and unregulated digital lending applications, mostly controlled by Chinese entities, the home ministry has asked the respective law enforcement agencies to engage domain experts in investigation of such complaints.

“A large number of complaints have been reported across India pertaining to illegal digital lending apps that provide short-term loan or micro credits at exorbitant interest rate with processing or hidden charges, especially to vulnerable and low-income group people and use the borrowers’ confidential personal data like contacts, location, photos/videos for blackmail/harassment. Harsh recovery practices followed by these illegal lending apps have claimed many lives across India. This issue has caused serious impact on national security, economy and citizen safety,” the home ministry stated in a communication sent to all state chief secretaries and UT administrators on October 28.

A couple of months back, the Congress had raised the issue of several Chinese apps having syphoned off around Rs 500 crore by duping lakhs of Indians through debt traps. It had alleged that an investigation between January and February 2021 had found over 1,100 digital loan apps available. Claiming a 12 times jump in loans on digital platforms between 2017 and 2020 and occurrence of 52 suicides due to blackmailing by these loan apps, the Congress sought to know what the Narendra Modi government was doing to curb these practices.

The home ministry, in its October 28 letter to the states and UTs, acknowledged having learnt that these predatory lending apps “that may not be regulated entities by RBI (Reserve Bank of India)” are using bulk SMS, digital advertisement, chat messengers and mobile app stores on a massive scale. “Borrower has to provide mandatory access to contacts, location, phone storage in order to avail loan. This data is misused to harass and blackmail the citizens using morphed images and other abusive practices by the recovery agents located in India as well as overseas violating RBI’s fair practices code.

The MHA further noted that such illegal practices by Chinese-controlled apps were an organised cyber crime executed using disposable emails, virtual numbers, mule accounts, shell companies, payment aggregators, API services (account validation, document verification), cloud hosting, cryptocurrency etc. Hence, it stated, domain experts should be involved in investigation of such mobile apps.

The ministry asked the law enforcement agencies to avail the services of National Cyber Forensic Laboratory (NCFL), one of the verticals of Indian cybercrime coordination centre (14C), for technical assistance on loan app analysis, malware analysis and crypto transaction tracing.

“All states/UTs are requested to take strict legal action in this regard … also spread mass awareness in all districts against the risks of using such apps,” said the MHA letter.

[The Times of India]

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