MeitY exploring verification process for loan apps with RBI, Finance Ministry: Rajeev Chandrasekhar

Minister of State for Electronics and Information Technology Rajeev Chandrasekhar.

The Ministry of Electronics and Information Technology (MeitY) wants to establish a verification process to prevent the proliferation of harmful loan apps in Google or Apple app stores, Minister of State for Electronics and Information Technology Rajeev Chandrasekhar said during the inaugural edition of Moneycontrol's India Fintech Conclave (IFC) in Mumbai.

Chandrasekhar said that the ministry will meet with the Reserve Bank of India and the Ministry of Finance to discuss this matter.

"We have recently seen loan apps. I think there has to be something around it and we are going to have a discussion with RBI and the Ministry of Finance on this where we think there should be some threshold, some sort of verification -- I don't want to call it licensing, but certainly some sort of gating before apps can come online to Google or Apple play stores," Chandrasekhar said.

These statements come at a time when, based on the directions of the Ministry of Electronics and Information Technology (MeitY), the government blocked over 138 betting apps and 94 lending apps, including Kissht, LazyPay, and Ola Avail Finance, for alleged Chinese connections. Later, the ban on Kissht, LazyPay, Buddy Loan, Faircent, and CashTM was lifted.

In an earlier interview with Moneycontrol, Chandrasekhar said that the lending apps were blocked based on decisions made through the prism of user harm, security, and national sovereignty links, and that they are being evaluated by various ministries.

"There is no policy of the government of India that is China-centric. There is no prohibition on any Chinese companies from investing in India. Nor are apps taken down because they are from China," Chandrasekhar said.

He explained that the apps were taken down because they violated Indian laws and rules. "Our approach to China or Chinese companies, is not because they are Chinese. It is because, in the case of loan they were busy violating all known laws on the planet," Chandrasekhar said.

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"In the case of some of the mobile phone companies that were looked at, because they were busily exporting data to unknown IPs out of India," he explained.

In response to a question about the dilemma faced by fintech entrepreneurs regarding the possibility of facing regulation from both the IT ministry and the RBI, Chandrasekhar acknowledged that there was difficulty in intersectional areas such as fintech.

"Certainly there is a challenge in many areas that intersect with being on the internet and being in a particular sector. So there is a sectoral regulatory that swings into action, in this case, RBI, and the internet administrative ministry which is us," Chandrasekhar said.

"I do agree that we have to figure out a better way of working within the government, with regulatory authorities and the ministries and not allow the chaos to impact the entrepreneurs. We need to get better and we are working on it," he said.

While responding to another question on the dominance of Big Tech in the payments ecosystem, Chandrasekhar said that the government is aware of the situation, and said that it has to figure out ways in which dominance does not affect consumers' rights, the experience of choice and access to products.

"If we see there is a certain market share is coming in the way of consumer getting free and fair choice, we will certainly step in. Today the CCI (Competition Commission of India) is doing its job, but nobody should be of the view, a certain market share means they can play fast and loose," he said.