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Predatory loan apps: Chartered Accountants under scrutiny, IT Ministry in consultation with Google Play Store

The probe by ICAI for allegedly enabling these predatory loan apps comes along with MeitY working with Google Play store to curb them

What's the news: The Institute of Chartered Accountants of India (ICAI) is investigating several chartered accountants (CAs) for their role in helping predatory Chinese loan apps function, Economic Times reported on August 18. Separately, the Ministry of Electronics and Information Technology (MeitY) is in consultation with Google Play to find a way to curb malpractices by loan apps, Business Standard reported on August 18. Why does this matter: Given the rising number of complaints concerning unauthorised digital lending apps that are targeting vulnerable Indian borrowers, charging them exorbitant interest rates, and resorting to extortion and blackmail tactics to collect payments, these two developments are a much welcome step to tackle the issue because, in more than a few cases, these unethical practices have resulted in borrowers committing suicide. RBI's new regulatory framework: Generally, third-party loan marketplaces and apps which work with regulated banks and non-bank lenders have to follow strict guidelines on interest rates and collection practices, but many of the predatory lending apps that have emerged in the last year either work with small non-bank lenders or they work outside any rules or regulatory framework. To tackle this, RBI on August 10 released a new regulatory framework to govern digital lending, but the framework doesn't address all concerns because it only applies to entities regulated by the RBI. This means those outside the ambit need to be tackled by other means such as working with the Google Play Store or restricting CAs from providing their services to these apps. Why is ICAI investigating CAs: According to Economic Times, some…

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