The ministry of electronics and information technology (MeitY) has decided to revoke the ban on some digital lending apps which are fully compliant with the rules and do not have any Chinese links.
Official sources said the decision to this effect was taken after the apps concerned appealed for a review and produced documents citing their compliance with the rules.
The ban on at least 12 digital lending apps is understood to have been revoked and more may follow in coming weeks. Some of the players on whom the ban has been lifted include Kishht, PayU-backed LazyPay, Avail Finance, and Indiabulls Home Loans.
Section 69A of the Information Technology Act, under which the apps were banned, empowers the government to restrict access to content it deems against the sovereignty and integrity of the country, security of the state, friendly relations with foreign states or public order. Under the Act, the banned entities can appeal to the government for a review of the decision by producing evidence that they are not inimical to the country and its interests, and if convinced the government has the powers to revoke any such ban.
“These firms have shown the genuineness of their operations and the government has revoked the ban,” said a person familiar with the development, noting they will be available on app stores. A lot of these apps were floated by regulated entities, such as non-banking financial companies (NBFCs).
According to industry sources, in the meeting with MeitY, these digital lenders were asked whether they have a certificate of registration from the Reserve Bank of India, if they store data within the local territories, about their customer grievance redressal approach, whether they lend to foreign nationals or not, audit reports, status of operations as an NBFC, among other things.
“The government has shown unrelenting support in ensuring that credible and fully compliant apps such as Kissht continue to work towards greater financial inclusivity in the country. We have served more than eight million Indians since 2017 and look forward to serving many millions more in the years forward. Kissht continues to provide hassle-free credit with the objective of doubling our customer base in 2023,” said Ranvir Singh, founder of Kissht.
According to sources, in the case of at least some of these digital lenders like Kreditbee, fake or clone apps using their brand identity had been floated on third party Android app stores like Aptoide.
“Over the course of the last two days, these lenders have submitted proof of their operations and information on their shareholders and investors to the government,” said another source.
The government on February 5 banned close to 232 apps involved in betting, gambling, money laundering, and unauthorised lending with alleged links to China. The banned apps also included 94 lending apps even with non-Chinese links, especially those which are not operated by regulated entities under RBI, people aware of the matter said. “This has impacted business confidence,” said another source. Many digital lenders have been concerned about the impact of the ban on their collections and lending.
Some of the industry experts and digital lending apps with whom FE spoke to, said initially there was no communication from the government regarding the ban and the reason behind putting these apps on the radar. There was a lot of confusion till MeitY approached with a meeting notice and asked for certain details.
“Our operations were smooth but as per the list being circulated on social media we were also on the government’s list and that in a way was affecting the brand image. Even the communication on removal of the ban, we did not receive officially from the government but from the internet service providers,” a senior executive of a digital lending app said.