87 illegal loan apps banned by the government citing data misuse, fraud and harassment

The Indian government has confirmed that it has blocked 87 illegal loan applications. The directive was issued by the Ministry of Electronics and Information Technology (MeitY), which acted under its statutory powers specified in Section 69A of the Information Technology Act 2000.

The move was formally reported in the Lok Sabha by Minister of State for Corporate Affairs, Harsh Malhotra. The action addresses escalating public concern over the operation of unauthorised and often predatory digital lenders. These platforms frequently bypass essential regulatory frameworks, including those established by the Reserve Bank of India, and have become notorious for their aggressive and coercive loan recovery methods.

The blocking directly tackles the issue by removing the applications from public distribution, effectively preventing new consumer engagement with non-compliant financial entities. The government’s response follows numerous public complaints and reports detailing instances of harassment, exorbitant interest rates, and the illegal accessing of users' personal data by these platforms.

Mr Malhotra also confirmed a parallel and continuous regulatory effort being pursued by the corporate affairs ministry. He detailed that action, including inquiry, inspection of accounts, and detailed investigations under the Companies Act, 2013, is routinely taken against companies engaged in online lending.

"Whenever any violation under the Companies Act, 2013 is found on the basis of the above, an appropriate legal action is taken," the Minister stated, underlining the comprehensive regulatory approach being adopted.

This strategy uses both the technical power of the IT Act to restrict access and the legal weight of the Companies Act to prosecute the underlying corporate entities. The government is aiming to establish a safer, regulated environment for digital financial services, ensuring that growth in the fintech sector does not come at the expense of consumer protection and legal compliance. This rigorous action is expected to serve as a strong deterrent to other illicit lending operators.