Unauthorized Loan Apps Banned: ₹1 Crore Fine, 10-Year Jail for Violations
The central government is planning to impose a ban on unauthorized loan apps. The government has introduced a draft bill regarding this plan, which proposes banning online loan apps that violate the rules. Additionally, the bill suggests a fine of ₹1 crore and imprisonment of up to 10 years for violators.
According to a report by Business Standard, this information was revealed. The Reserve Bank of India (RBI) had first suggested these measures in a November 2021 report from its Digital Lending Group.
Purpose of the Government’s Draft Bill
The title of the draft bill introduced by the central government is the “Banning of Unregulated Lending Activities (BULA) Act.” The aim of this bill is to prohibit individuals and companies from offering loans without permission from the RBI or any other regulatory body.
Key Aspects of the Government’s Draft Bill
- The bill includes digital lending platforms, stating that unauthorized platforms will not be allowed to legally offer loans.
- Violating platforms could face imprisonment from 7 to 10 years, and fines ranging from ₹2 lakh to ₹1 crore.
- If the loan provider adopts coercive recovery methods, they could face imprisonment from 3 to 10 years.
- Cases involving multiple states or union territories, or large sums of money, will be transferred to the Central Bureau of Investigation (CBI).
Concerns Over Fraudulent Loan Apps
This bill comes at a time when fraudulent loan apps have become a significant concern due to their aggressive recovery practices, exorbitant interest rates, and hidden fees.
Google Removes Over 2,200 Apps from Play Store
Due to the pressure from these loan apps, many people have suffered from depression, and some have even committed suicide. As a result, Google removed over 2,200 such apps from the Play Store between September 2022 and August 2023.
