Illegal loan apps under fire as govt, RBI ramp up enforcement and monitoring

New Delhi [India], March 17 (ANI): The Government and the Reserve Bank of India (RBI) have intensified measures to tackle the proliferation of fraudulent loan applications. In a written response in the Rajya Sabha today, the Minister of State in the Ministry of Finance, Pankaj Chaudhary, detailed a coordinated strategy involving regulatory guidelines and enforcement actions to protect citizens from exploitation by unauthorised mobile platforms.
Chaudhary stated that the RBI has issued specific regulatory guidelines on digital lending, which aim at firming up the regulatory framework for digital lending, including loans through mobile apps, while enhancing customer protection and making the digital lending ecosystem safe and sound.
Under these new guidelines, all Regulated Entities (REs) are required to ensure strict compliance. The Ministry noted that compliance is examined on a sample basis during supervisory assessments. Any observed non-compliance results in rectification requirements apart from "initiating supervisory/ enforcement action, as deemed fit."
To further disrupt the ecosystem of illegal digital platforms, the Ministry of Electronics and Information Technology (MeitY) issues directions to block fraudulent apps under Section 69A of the Information Technology (IT) Act, 2000.
A key component of this crackdown is the operationalisation of a directory titled 'Digital Lending Apps (DLAs)' on the RBI website, which was launched on July 1, 2025. This directory serves as a tool for customers to verify the association of any app with a Regulated Entity of the RBI.
Furthermore, the government is engaging with major internet intermediaries and messaging platforms to review the operations of unauthorised apps. These intermediaries have been instructed to institute stringent, technology-driven vetting and real-time enforcement mechanisms to detect and prevent malicious advertisement of illegal loan apps originating from offshore entities.
Reporting of these crimes has been streamlined through the Indian Cyber Crime Coordination Centre (I4C) under the Ministry of Home Affairs. Citizens can report illegal loan apps via the National Cybercrime Reporting Portal or the dedicated helpline number "1930."
Additionally, the 'SACHET' portal and the State Level Coordination Committee (SLCC) allow for the lodging of complaints against entities collecting money illegally. To prevent such incidents, the RBI and banks are conducting awareness campaigns through SMS and radio, alongside electronic-banking awareness and training (e-BAAT) programmes, which focus on awareness about frauds and risk mitigation.
The Minister clarified that while the Central Government provides advisories and financial assistance for capacity building, the primary responsibility for investigation rests with State Law Enforcement Agencies.
Since 'Police' and 'Public Order' are State subjects under the Seventh Schedule of the Constitution, the States and Union Territories are primarily responsible for the prevention, detection, investigation and prosecution of crimes including illegal mobile applications.

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This report was published from a syndicated wire feed. Apart from the headline, the EdexLive Desk has not edited the copy.