Illegal lending apps on FSDC radar

Regulators discuss fresh measures to curb the further spread of harmful unauthorised lending through online apps; they reiterate need for uniform KYC norms so that KYC records can provide customers ‘interusability’ across the financial sector

Fresh measures to curb unauthorised online lending apps’ operations could be on the anvil, following deliberations on the issue at the Financial Stability and Development Council (FSDC) chaired by Finance Minister Nirmala Sitharaman on Wednesday.

The FSDC, which has all financial sector regulators on board including the Reserve Bank of India (RBI), also discussed issues related to macro financial stability and the country’s preparedness to deal with any challenges that may come up.

It emphasised the need for “constant vigil and proactive efforts” to detect emerging financial stability risks in the current domestic and global macrofinancial situation.

Apart from taking necessary measures to maintain the resilience of the financial sector, the FSDC members also decided to strengthen interregulatory coordination to further develop the financial sector so that it continues to provide the requisite financial resources for inclusive economic growth.

‘Curb further spread’

Arresting “the harmful effects of unauthorised lending through online apps and measures to curb their further spread” figured prominently in the discussions of the FSDC.

The Council also made a reiteration of the push for regulators to simplify and digitise the KYC (Know Your Customer) process and adopt uniform KYC norms so that those KYC records can provide customers ‘interusability’ across the financial sector.

Importantly, apart from the chiefs of various financial sector regulators and top finance ministry officials, the FSDC meeting was also attended by the Secretary to the Ministry of Electronics and Information Technology S. Krishnan. The Ministry is critical to the process of delisting lending apps that are not authorised by the RBI.

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