A committee set up by the central bank has suggested reining in controversial digital loan apps through a mix of measures, including creating a nodal agency to verify their credentials and legislation to prevent ‘illegal lending’.A committee set up by the central bank has suggested reining in controversial digital loan apps through a mix of measures, including creating a nodal agency to verify their credentials and legislation to prevent ‘illegal lending’.

The report’s thrust is on enhancing customer protection and making the digital lending ecosystem safe while encouraging innovation.

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The Reserve Bank of India (RBI) had set up a working group on digital lending, including online platforms and mobile apps, headed by its executive director Jayant Kumar Dash in January after allegations of coercive debt recovery tactics. The committee, in its report, has now suggested that a nodal agency be set up which will verify the technological credentials of digital apps of balance sheet lenders and lending service providers. It will also maintain a public register of verified apps on its website.

According to the committee’s findings, approximately 1,100 lending apps were available for Indian Android users between 1 January and 28 February. Of these, 600 were illegal, the panel found.