The Indian government has issued stringent directives to social media and online platforms, urging them to abstain from hosting advertisements of fraudulent loan apps. Union Minister Rajeev Chandrasekhar underscored the Ministry of Information Technology’s firm stance, emphasizing that online platforms must refrain from endorsing deceptive and unlawful loan apps that exploit and mislead internet users.
Highlighting the crackdown on misleading loan app advertisements, Chandrasekhar stated, “One of the areas we are now cracking down on is advertising of fraudulent loan apps that many platforms are carrying.” He emphasized the directive’s significance in preventing misleading practices and safeguarding individuals using the internet from exploitation.
The advisory issued by the IT ministry explicitly forbids intermediaries from showcasing ads of fraudulent loan apps, holding them accountable for any repercussions arising from these misleading promotions. This move comes amid rising concerns over the proliferation of loan and betting apps during the COVID-19 pandemic, where individuals in financial distress turned to these platforms for quick loans.
Reports surfaced highlighting the predatory practices of certain loan apps, including exorbitant interest rates and coercive methods for loan recovery, causing widespread distress among borrowers. The advisory also urges online platforms to implement robust grievance redressal mechanisms to address user complaints effectively.
This advisory follows previous discussions between the IT ministry and the Reserve Bank of India (RBI) aimed at curbing illegal betting and loan apps. In October, the ministry proposed enhanced Know Your Customer (KYC) processes to the RBI for banks to mitigate fraudulent activities.
Moreover, recent data revealed that Google took action against fraudulent loan apps by suspending or removing over 2,500 such apps from its Play Store between April 2021 and July 2022. Union Finance Minister Nirmala Sitharaman, in a written reply to the Lok Sabha, highlighted the government’s ongoing engagement with regulatory bodies like the RBI to address the issue effectively.
The RBI has also provided a ‘whitelist’ of legitimate apps, which was shared with Google by the IT ministry. Given that the Google Play Store serves as a primary distribution channel for digital loan apps, this collaboration aims to reinforce measures against fraudulent practices and ensure a safer online environment for users.
Sources By Agencies
