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Four questions that remain despite Indian govt revoking ban on some lending apps

The Indian government has revoked the ban on at least seven digital lending apps inlcuding LazyPay, Kissht, and IndiaBulls Home Loans.

The Indian government has revoked the ban on at least seven digital lending apps including PayU’s LazyPay, Kissht, and Indiabulls Home Loans, Business Standard reported on February 10.

“The decision has been taken after receiving presentations from the platforms,” a government official told the news outlet.  Last week, some of the banned apps submitted documents on their shareholding pattern, regulatory certificates, compliance with various laws, etc. to the government to “prove their genuineness”.

Why does this matter: Earlier on February 5, the government issued orders to block 94 digital lending apps that reportedly had Chinese links, but it soon emerged that some loan apps without Chinese links, including popular ones like LazyPay, were also affected. This led to fear in the industry as the lack of clarity on why these apps were banned meant that anyone could be next, which is not a great environment to be in. The revocation of the ban should ease some of these fears.

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Which questions remain: 

  1. Why were these apps banned in the first place? What caused the government to include these apps on the ban list? Which Ministry/regulatory requested for these apps to be banned? Without clarity on these questions, the digital lending industry will continue to function on shaky grounds, which could harm investor interest in this fast-growing industry.
  2. Which apps are now un-banned? We know the names of some of the apps that have been removed from the blocking list, but there is no official list of all such apps, just like we don’t have a list of all apps that were banned in the first place. As usual, the government exercises its powers under Section 69A of the IT Act in secrecy.
  3. What caused the government to revoke the ban on some apps? What led the government to provide relief to some of the apps? Which documents had been submitted by these companies to appease the government? What concerns held by the government were addressed and how?
  4. Why is a mPokket “impersonator” being allowed? Lending platform mPokket, which seems to appear on the original ban list as “mpokket.en.aptoide.com” told Business Standard that the namesake app on Aptoide (a third-party Android app store) is a clear case of impersonation. “We suspect that it may be a proxy app on Aptoide and we are looking into it further. Blocking of such apps protects both the consumers and lenders,” mPokket commented. But the Indian government has removed the mPokket app on Aptoide from the blocking list, Economic Times reported. It’s not clear why the government did this despite mPokket clearly stating that the Aptoide link belongs to an impersonator. Did mPokket slip up and make a wrong statement, or did the government mess up and allow back a fraudulent app? ??‍♂️

This post is released under a CC-BY-SA 4.0 license. Please feel free to republish on your site, with attribution and a link. Adaptation and rewriting, though allowed, should be true to the original.

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