Lending app ban: A final warning for fintechs

Lending app ban: A final warning for fintechs

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Pratik Bhakta

192 reads
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Pratik Bhakta

192 reads

After a government ban threatened to disrupt their business, India’s lending fintechs have been put on notice. It was initially speculated that the government was cracking down on companies with Chinese links, but the actual issue is that many lending startups play fast and loose with compliance.

February 13, 2023

7 MINS READ

On February 6, news trickled in that multiple fintech apps were about to be blocked by the Indian government. Initially, only two apps—LazyPay and Kissht—were mentioned. Soon, the likes of KreditBee, Ola Money’s Avail Finance, peer-to-peer lending platform Faircent, and RupeeRedee also found themselves in the government’s crosshairs.

“We got the information that our app might get shut down from our friends at Google and telecom service providers. We never received any official notification from the government,” said a top executive at a startup impacted by the move.

Soon after, the government invoked Section 69(A) of the IT Act, 2000 to block the company’s website. Its app was expected to be shut down the following day, but it continued to function as usual throughout the week.

It took until February 8 for industry players to finally meet with officials from the Ministry of Electronics and Information Technology, or MeitY. Within a day, the concerned companies shared the relevant information the ministry wanted, which resulted in legitimate lending firms getting the green light from the government on February 10.

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