MeitY bans lending apps like PayU’s LazyPay, Kissht; states the apps are a threat to India’s sovereignity and integrity in 2023
The Indian government ordered to ban on 94 lending applications on Sunday. The list included Indian apps of Indian companies, as confirmed by valid sources.
The Ministry of Electronics and Information Technology has banned LazyPay’s website. The application is a buy now, pay later platform of PayU’. Naspers, a South African and Dutch-based firm, owns the latter.
LazyPay has informed on its website that the application has been blocked following the Ministry of Electronics and Information Technology orders following the IT act.
However, it has yet to be made evident why the IT ministry has called for a ban on such applications.
The IT Ministry has even called for a ban on another lending platform named Kissht, making it unavailable for Indian users.
Fosun, a prominent Chinese conglomerate, owned more than 17 percent of stakes in the lending platform but has divested the stakes to the Singaporean government.
In response to the ban by the Indian government, PayU has talked to valid sources stating that the application and websites are currently unavailable via a few Internet service providers. The authority is trying its best to rectify the issue.
Kissht founder Ranvir Singh has talked about the matter stating that the company will contact MeitY to resolve the issue soon. The company has a base of lakhs of customers who are impacted by the ban. The ban will prevent their ability to take credit for productive activities.
MeitY has received orders from the Ministry of Home Affairs to block different applications and websites. The ban has been due to the complaints received by several police cyber cells, which have ordered the MHA to ban such applications. The officials have not yet disclosed the names of all the applications.
The IT ministry has declined to comment on the matter.
A founder of a fintech firm has talked in response to the ban stating that the decision has triggered chaos among the lending platforms even though many other applications have not received any notification yet.
He has further asserted that it has become a matter of concern as the applications are trying to resolve the issues and criteria for the ban. The sudden decision will affect both loan repayments ad addition of a new user base for the impacted platforms.
The Public broadcaster Prasad Bharati has revealed recently that the IT ministry has initiated the process of the ban and blocking 138 betting apps and 94 loan platforms. The applications have a Chinese link. The move has resulted in the Ministry of Home Affairs.
A threat to India’s sovereignty and integrity: Why was the ban on lending applications necessary?
232 applications have been banned by the Ministry of Electronics and Information Technology in recent orders. The Union Home Ministry has asserted that most applications have Chinese origin.
The applications contained materials that could be a threat to India’s sovereignty and integrity.
It also marks the first time that the Indian government has caused the blocking of various lending platforms like Kissht and PayU. However, the apps had Indian directors and employees.
Previously, the IT ministry, along with the Reserve Bank of India, has organized workshops to create awareness among customers about the risks associated with lending from such platforms. The motive of such apps was to trap the customers looking for funds through their quick loan scheme with a rise in the interest rates as high as 3000 percent.
The last two years have visualized a ban on 400 gaming, photo editing software, web browsers, and many such apps which has Chinese links.
Al, the blocked applications under the IT Ministry have followed Section 69A of the Information Technology Act that was introduced in 2000. The policy allows the users the powers to exercise emergency steps to protect the integrity, sovereignty, defense, and security of the nation and the public.
Why a sudden ban on lending apps?
The latest available data in 2022 shows that around 12903 complaints have been received against banking and nonbanking platforms, including the digital lending platforms, about the harassment caused to the recovery agents.
Most of the lending apps are operated by entities that are not regulated by the RBI. The major concerns related to such apps were issues of mis-selling, a threat to data privacy, charging extremely high-interest rates, and lack of transparency, followed by a lack of a customer grievance-solving system.
Google has previously announced that it has removed more than 2000 lending platforms for violating the policies of Playstore and money lending policies by the RBI.
Google has removed more than 30 apps, including Lazypay, because they did not comply with the policies of the RBI.
Edited by Prakriti Arora