Explained: What's DIGITA, RBI's new agency to deal with illegal lending apps?
DIGITA would verify and maintain a public register of authorized digital lending apps, aiding law enforcement efforts. Additionally, Google has removed over 2,200 digital lending apps from its PlayStore, aligning with RBI's policy changes to combat fraudulent practices.
FollowIn a bid to combat the proliferation of cyber fraud and illegal lending apps, the Reserve Bank of India (RBI) is mulling over the creation of a Digital India Trust Agency (DIGITA), sources revealed. This proposed agency aims to serve as a safeguard against fraudulent digital lending practices by facilitating the verification of digital lending apps and maintaining a public register of verified apps.
What will DIGITA do?
Sources familiar with the matter highlighted that apps lacking the 'verified' signature of DIGITA would be deemed unauthorized for law enforcement purposes. This pivotal measure is anticipated to play a crucial role in curbing financial crimes in the digital domain. Once established, DIGITA would assume the responsibility of vetting digital lending apps, ensuring their compliance with regulatory standards.
The introduction of a stringent verification process is expected to imbue greater transparency and accountability within the burgeoning digital lending sector. Recent times have witnessed a surge in fraudulent activities and unethical practices within this domain, prompting regulatory bodies to take proactive measures.
What measures has RBI taken?
Furthermore, the RBI has taken proactive steps by sharing a list of 442 unique digital lending apps with the Ministry of Information Technology (IT) to whitelist with Google. This move underscores the collaborative effort between regulatory authorities and tech platforms to weed out illegitimate apps from circulation. Google, in response, has removed over 2,200 digital lending apps (DLAs) from its app store between September 2022 and August 2023.
This decisive action by Google aligns with its updated policy regarding the enforcement of loan apps on the PlayStore. Under this revised policy, only apps published by RBI-regulated entities (REs) or those operating in partnership with REs are permitted. Notably, this policy amendment was initiated at the behest of the RBI and the Department of Financial Services (DFS) under the Finance Ministry.
Overall, the proposed establishment of DIGITA and the concerted efforts to regulate digital lending apps underscore the resolve of regulatory bodies to safeguard consumers and maintain the integrity of the digital financial ecosystem.
