India News Get -BusinessCentral government proposes to crack down on unregulated lending, may ban loan apps, impose ₹1 crore penalty and 10-year jail term
The central government is considering banning apps that provide loans without authorization. The government has presented a bill regarding this plan. This bill calls for banning counterfeit online lending apps. Apart from this, a fine of Rs 1 crore and 10 years in prison have also been proposed.
This information was given in a Business Standard report. These measures were first suggested in the November 2021 report of the digital lending group of the Reserve Bank of India, namely the RBI.
What is the objective of the government’s bill?
The title of this central government bill is – Prohibition of Unregulated Lending Activities (BULA). The aim of this bill is to prohibit individuals and companies from granting loans to people without obtaining permission from the RBI or any other regulatory body.
Particularities linked to the government bill
Platforms offering digital loans have also been included in this bill. Unlicensed platforms cannot grant loans legally. Giving unauthorized loans can attract a jail term of 7 to 10 years and a fine ranging from Rs 2 lakh to Rs 1 crore. 3 to 10 years will be granted. Cases involving many states and union territories or involving large sums of money will be transferred to the CBI.
Fraudulent loan apps are a concern
The bill comes at a time when fraudulent loan apps have become a concern due to their coercive collection practices, exorbitant interest rates and hidden fees.
Google removed more than 2,200 apps from the Play Store
Due to the pressure of these loan applications, many people fall into depression and some even commit suicide. For this reason, Google removed more than 2,200 such apps from the Play Store between September 2022 and August 2023.