Fintech platform PayU’s buy-now-pay-later service LazyPay’s website has been taken down following a notice from the Ministry of Electronics and Information Technology (Meity). PayU is owned by South African and Dutch group Naspers.
“The website has been blocked as per the order of the Ministry of Electronics and Information Technology under the IT Act, 2000,” LazyPay said on its website late on Monday.
It was not immediately clear why the IT ministry had issued such a directive.
Kissht, another lending platform, was also unavailable for users in India.
Also read | Govt blocks 232 betting, loan apps linked to China, other countries
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Chinese conglomerate Fosun owned more than 17% stake in Kissht, but it was later divested to various Singapore government funds.“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,” a spokesperson for PayU told ET.
Kissht cofounder Ranvir Singh told ET: “We are reaching out to Meity to resolve this as soon as possible as lakhs of our customers who avail our services are impacted. This will impact their ability to use credit for productive purposes”.
“MeitY gets inputs from the Ministry of Home Affairs for blocking apps and sites. The MHA may have received inputs from various law enforcement agencies, including state police cyber cells, which could have got complaints against some of the apps,” the official said, without revealing the names of apps that were banned.
The IT ministry did not respond to ET’s email seeking comment.
According to the founder of a fintech firm, the development has triggered panic among lending platforms even as others had yet to receive any official notification on the matter.
“It’s a matter of concern, of course. We are trying to figure out the reason and criteria for this,” the person said, adding that both loan repayments and new user additions would come to a halt for impacted platforms.
On Sunday, public broadcaster Prasar Bharati said that the IT ministry had started the process of banning and blocking 138 betting apps and 94 loan lending apps, “which reportedly have Chinese links on an “urgent” and “emergency” basis”.
“The move came after a communication from the Ministry of Home Affairs,” it said.
Crackdown on lending apps
According to the latest available data, between April 1, 2022 and November 30, 2022, 12,903 complaints were received against banks and non-banking financial companies (NBFCs) pertaining to digital lending apps and against recovery agents or harassment by recovery agents.
In 2021, the Reserve Bank of India had constituted a working group on digital lending, including lending through online platforms and mobile apps, to study all aspects of digital lending activities in the regulated financial sector as well as by unregulated players.
The group said in a report that a majority of complaints were about lending apps promoted by entities not regulated by the RBI.
The report also identified major concerns related to issues of mis-selling, breach of data privacy, charging of exorbitant interest rates, intrusive method of recovery, lack of transparency and lack of grievance redressal mechanism.
Last month, the government informed Parliament that the RBI also issued advisories to state governments to keep a check on “unauthorised digital lending platforms and mobile apps through their respective law enforcement agencies”.
In August last year, Google had said that it removed as many as 2,000 credit disbursement apps between January and June for violating its Play Store policies as well as rules around money lending by the RBI and law enforcement agencies, and on user feedback.
In January 2021, Google had removed from its Play Store 30 lending apps, including LazyPay, that did not comply with the RBI regulations.
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