The ministry of electronics and information & technology (MeitY) has sent notices to the digital lenders facing a potential ban, giving them an opportunity to present their case before an inter-ministerial panel on Wednesday, three people aware of the matter told CNBC-TV18.

The NBFCs were asked to send list of their apps to the central bank which was then forwarded to the ministry to take the final call on the ban.

RBI Governor Shaktikanta Das said that the government has taken this step after considering the said list.

The ministry sent these notices to the affected digital lenders on Tuesday evening. CNBC-TV18 has seen a copy of the notice sent to multiple digital lenders. "You are hereby (through this mail) given a notice as an opportunity of hearing to attend and submit your views before the inter-ministerial Committee (Rule-7) in its meeting scheduled to be held on 08.02.2023," read the mail. The inter-ministerial committee is expected to have representatives from MeitY and the ministry of home affairs (MHA).

MeitY said it was in receipt of a request under section 69A of the IT Act from the ministry of home affairs to block the apps and websites of certain digital lending platforms, the notice sent to lenders read. In this request, the ministry of home affairs alleged that certain digital lending apps/websites were functioning in a “non-transparent method, collecting exorbitant interest rates, threatening, harassing using their un-authorised personal information, etc."

Also Read: Lazypay, Kissht, other prominent digital lenders face app & website ban in India in fresh crackdown

Further, the notice from MeitY read, the allegations also included these apps “communicating to the servers located in hostile countries”. It said that the IP/domains where their app was connecting were reportedly involved in suspicious and malicious activities.

"To avoid any misuse of Indian users' data, MeitY has issued interim blocking directions to block such applications/websites under the provisions of section 69A of IT Act 2000," the notice read.

The ministry has also asked the digital lenders facing this potential ban to submit relevant documents pertaining to their company information ahead of the meeting scheduled on Wednesday. It has asked digital lending platforms to submit documents including the registration certificate issued by RBI/ competent authority for performing loan/financial-related activities in India. It has also asked them to submit documents with details of data storage, its location, data sharing patterns data sharing policy of the application. In addition, MeitY has sought information on details of investors, shareholding patterns, foreign investors’ details, grievance redressal mechanisms, and the latest app security audit report from lenders.

The proposed meeting comes after several digital lenders met with officials of both MeitY and MHA on Tuesday to plead their case and seek a review to remove any ban on their apps and websites which could affect loan recoveries, new customer additions, and impact businesses. CNBC-TV18 had earlier reported that LazyPay, Kissht, Kreditbee, and Indiabulls Home Loans were among those that were on this ban list.

Also Read: Google Play and Apple App Store get a list of safe digital lending apps they can host in India

It is understood that as many as 94 loan apps were part of this ban list drawn up by MHA, and sent to MeITY for action. CNBC-TV18 reported that MeitYhad sent this list to Google, asking it to take down the banned loan apps from its PlayStore. However, sources indicated that Google is currently in the process of conducting a review of the list, and has yet to take down any loan apps on the ban list from its PlayStore.

A Kissht spokesperson told CNBC-TV18, "The Kissht app is currently operating smoothly for our customers across India. While we haven't received any formal notification on the status of our app, we are aware of the development and are seeking clarity from the concerned authorities. We are hopeful that this will be resolved soon without interrupting services for our existing users."

LazyPay earlier issued a statement as well, saying "Due to unavoidable circumstances our website and app are currently unavailable via a few Internet Service Providers. Please be assured that we are doing everything to resolve the issue."

First Published:Feb 8, 2023 12:30 AM IST