Kissht To LazyPay: Centre Revokes Order Blocking Seven Loan Apps

The government has revoked blocking orders against at least seven money-lending platforms affected by the recent crackdown on 94 loan apps, after reviewing their documents justifying compliance with internet and finance-related laws, multiple sources said.

The ministry gave a verbal confirmation on the relief to the players late on Thursday, while internet service providers confirmed it on Friday. Though the platforms await a written communication, it was confirmed that the websites and mobile apps of Kissht, LazyPay, and Indiabulls Home Loans have been removed from the blocking order.

“The decision has been taken after receiving presentations from the platforms according to the process. If any platform disagrees with the action, they have the right to review and appeal against the order. It was up to the committee to decide if a platform follows the legal norms,” said a top government official.

The Ministry of Electronics and Information Technology (MeitY) earlier this week issued blocking orders against 138 betting and 94 loan apps stating “links with China”, and alleged “involvement in money laundering” and posing a “threat to financial security”.

On Wednesday, the ministry conducted a formal meeting with around 12 representatives of Indian loan apps listed in the blocking order. According to sources, the ministry officials did not raise any specific issue against any of the platforms. However, questions were raised on whether the apps were operating under the regulatory ambit of the Reserve Bank of India, whether they were Non-Banking Finance Companies (NBFCs), and if they lent money to individuals residing in India.

The main concerns also included if there were fund flows outside India and if the location of data storage of the app was outside of India.

“Some of the documents the platforms were asked to submit included the certificate of registration with the RBI, audit reports by RBI-empanelled auditors on the localisation of data storage, an undertaking that the platform served only Indian nationals with due KYC, and a note on the grievance redress practices of the platform.

It is still unclear what specific issue led to a ban of this type,” said a person closely familiar with the matter.

The blocking orders for the apps were issued on an urgent and emergency basis after an alert from a nodal officer of the Ministry of Home Affairs alerted the IT ministry. Many fintech industry players were confused due to the sudden development.

“We are very thankful to the government that they heard us on the matter and took immediate steps to correct the situation. Having said that, such instances shake up the investor as well as customer confidence in the sector,” said an industry insider.

App stores such as Google Play Store have been told that a list of apps to be unblocked will soon be submitted.

“We thank the Government of India and MeitY for revoking the order to block Kissht. 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 aim to double our customer base in 2023,” said Ranvir Singh, founder, Kissht.

Another digital lending player said, “From what we are given to understand, Google has already received a list of apps that are to be removed from the Play Store and it does not contain any of the Indian fintech lending apps. The list provided by the RBI to the government is likely to be updated with all good apps that are functioning in the ecosystem.”

BREAKING THE LOGJAM

• On Wednesday, the ministry conducted a formal meeting with around 12 representatives of Indian loan apps listed in the blocking order
• Questions were raised on whether the apps were operating under the regulatory ambit of the Reserve Bank of India
• The main concerns also included if there were fund flows outside India and if the location of data storage of the app was outside of India
• App stores like Google Play Store have been told that a list of apps to be unblocked will soon be submitted
• The govt had issued blocking orders against 138 betting and 94 loan apps stating ‘links with China’
• The blocking orders for the apps were issued on an urgent and emergency basis