RBI Announces Initiatives to Curb Unauthorized Lending Apps and Enhance Digital Transactions

RBI unveils measures to tackle unauthorized lending apps and bolster the digital lending ecosystem. Key initiatives include creating a public repository of digital lending apps, increasing UPI transaction limits, enabling 'Delegated Payments,' and real-time cheque clearance for MSMEs. Credit information reporting frequency is also enhanced.

The Reserve Bank of India (RBI) has introduced significant measures to curb unauthorized lending apps and ensure consumers are protected from these illegal practices. RBI Governor Shaktikanta Das announced the creation of a public repository of digital lending apps (DLAs) to help consumers identify unauthorized lending tools. Entities regulated by RBI will be required to report and update their DLAs in this repository.

Governor Das emphasized that these efforts are aimed at establishing a robust digital lending ecosystem in the country. He mentioned that the RBI has already taken several steps to foster the orderly development of this ecosystem and address issues stemming from unauthorized digital lending apps.

Unauthorized lending apps often impersonate legitimate lenders to steal personal and financial information. To counter this, the regulated entities must report the updated information on their DLAs. Last year, the government banned and blocked 138 betting apps and 94 loan lending apps linked to Chinese entities on an urgent and emergency basis.

Among the new announcements, the RBI has raised the limit for tax payments via UPI from Rs 1 lakh to Rs 5 lakh per transaction, facilitating easier tax payments. The introduction of 'Delegated Payments' in UPI will allow a primary user to authorize another individual to make transactions up to a limit from their bank account without needing a separate account linked to UPI.

For MSMEs and small traders, cheques will now be cleared on a real-time basis, reducing the processing time from two days to a few hours. This move is expected to expedite cheque payments, benefiting both payers and payees.

Additionally, the RBI has enhanced the frequency of credit information reporting by lenders from a monthly basis to every fortnight. Borrowers will benefit from quicker updates to their credit information, and lenders will be able to make more informed risk assessments.

(With inputs from agencies.)