The Reserve Bank of India has discovered 600 unlawful lending apps in India.

According to the RBI, there are 600 illicit lending apps in India that are available on app stores.
RBI finds 600 illegal lending apps operating in India

In the last year, the Reserve Bank of India's (RBI) Working Group on Digital Lending discovered 600 illicit lending apps functioning in India. According to the RBI, between the beginning of January 2020 and the end of March 2021, "Sachet," a platform established by the RBI to combat unregistered firms, received about 2,562 complaints against digital lending apps.

The RBI's Department of Supervision has been appointed as the nodal department for complaints about unlawful digital lending platforms by the government. The agency has established a procedure for dealing with specific references to unlicensed digital lending platforms.

The RBI warned the public in December 2020 to be wary of unscrupulous actions of unlicensed digital lending platforms and to check the antecedents of the company or firm making such loans.

State governments have also been advised by the RBI to keep an eye on such applications through their local law enforcement authorities.


Furthermore, 27 illegal loan lending apps were blocked using the procedures outlined in the Ministry of Electronics and Information Technology's Information Technology (Procedure and Safeguards for Blocking for Public Access of Information) Rules, 2009, which were notified under section 69A of the Information Technology Act, 2000.

The RBI has been concerned about the rapid growth of digital lending apps in India, particularly during the pandemic and subsequent lockdowns. As consumers faced difficulties like job losses and limited access to banking institutions, a slew of apps promising instant cash sprung up.

On Monday, the government informed the Lok Sabha that the RBI has looked at state-by-state complaints from borrowers received between January 2020 and March 2021.

Maharashtra got the most complaints (572), followed by Karnataka (394), Delhi (352), Haryana (314), Telangana (185), Andhra Pradesh (144), Uttar Pradesh (142), West Bengal (138), Tamil Nadu (57), Gujarat, and Uttar Pradesh (142). (56).

The RBI had received concerns regarding the excessive interest rates levied by some apps, as well as the lengthy loan recovery process.


Despite the fact that some nations, such as China, have cracked down on such apps, India has the most. The central bank put up a panel in November last year, and it was discovered that more than half of the 1,100 digital loan companies were functioning unlawfully.

Experts believe that the popularity of these apps, despite their high-interest rates, reflects a desire for credit that traditional lending and financial systems are unable to provide for a variety of reasons.


Following the government's red flags, digital giants such as Google, whose Android platform is the most popular in India, conducted a thorough evaluation of apps available on its Play Store.

According to reports, Google has outlined several dos and don'ts for app marketers, necessitating platforms' production of documentation that they have the necessary lending licenses.

However, digital lending is proven to be a difficult business to control with a large footprint. The RBI panel is aware that apps that are blocked by platforms like Google get over the limitations by migrating to third-party platforms or advertising via text messaging.

Many lending platforms are run by foreign companies that are not subject to Indian law. The Reserve Bank of India is reportedly mulling a new set of stricter guidelines, including increased penalties for non-compliant apps and unregulated loan providers.