Finance Minister Nirmala Sitharaman informed the Rajya Sabha on December 16, 2022 that there is a coordinated effort within the government to contain Chinese digital loan apps, and ensure that the common man is not being cheated by them. Action is being initiated against those who are misusing such apps, she added.
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Ms. Sitharaman was making a suo motu response to Trinamool Congress MP Nadimul Haque who used Zero Hour to raise the issue of the unethical practices of digital lending apps inflicting financial harm on the economically weaker borrowers of the country.
“The issue that the member has raised about Chinese apps and how common people are being harassed and cheated by some of these apps and, therefore, some action has to be taken up seriously,” said the Finance Minister. “In the last 6-7 months, I have had personal meetings with the representatives of the RBI [Reserve Bank of India] and also with my Secretaries in the Ministry. Action from the RBI’s side and our side, including the Ministry of Corporate Affairs, has been initiated in this. A lot of such apps which are badly misusing have also been brought to the attention of MeitY [the Ministry of Electronics and Information Technology]. So, there is a coordinated effort to contain such apps and also to take action against those who are misusing such apps,” she said.
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Mr. Haque said that there were a huge number of complaints received against banks and Non Banking Financial Companies related to digital lending apps. According to an answer given in the Lok Sabha, as many as 12,903 complaints have been received against the digital lending apps and against recovery agents under the Integrated Ombudsman Scheme, between April 1, 2021 and November 30, 2022
“Digital lending apps charge far higher rates of interest than traditional banks... They are charging interest from 14.5% to 38.5% per annum which is very much higher than traditional banks... Out of 1,100 apps, as many as 600 apps are illegal and I have to share with the House that most of these apps are Chinese apps. They offer small loans without much paper work and then they bully the customers who are unable to repay the loans on time,” said Mr. Haq. “Things came to such an extent that in November, 2020, one person, Sai Alwin, on a small loan of ₹3,000, committed suicide because most of these apps require users to grant them access to their texts, images, contacts as well as camera. Then, these apps copy contact list and photos and use them to harass the victims,” he said.
The Congress’ Randeep Surjewala intervened saying that the Chair had the time to listen to discussion on Chinese apps but did not have time to allow a debate on Chinese incursions.
Responding to this, Ms. Sitharaman asked whether the Congress party wanted to prove that the issues of the common man were not their concern. “This is a common man’s problem on which we have taken action. Prime Minister Modi is concerned about the small borrowers who are getting cheated by apps. The Congress party has clearly betrayed and they have lack of concern for common man,” she said.