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The group headed by Jayant Kumar Dash, RBI executive director, had met several times in the last two months, and consulted with many top officials of National Payments Corporation of India (NPCI), tech companies such as Google, and senior police officers, and sought their inputs. The report, which is likely to be made public soon, will form the basis for setting guidelines for the fast-growing digital lending sector.

“The working group has almost concluded the meetings and is likely to submit the report in next two weeks,” an official close to the group said. He said it was a Herculean task to list out hundreds of illegal mobile apps active in the country and get them deleted from the various application stores.

Since fintech and online lending are the future, RBI is of the opinion to give boost to the sector and not disturb the innovation.

The central bank had sent out an advisory on December 23, 2020, following several news reports about the high-handed recovery methods employed by some online lenders. The RBI had asked consumers to report such apps to any of the law enforcement agencies or file an online complaint with the banking regulator.

But soon after, a spate of suicides of victims allegedly over name shaming and blackmailing by the online money lenders forced the RBI to set up a working group on January 13, 2021, and look into the matter more seriously.

The group had been given a three-month deadline to submit its report.

Even as the RBI committee went about collecting information, there were fresh cases of harassment and social shaming tactics employed by the online lenders.

“It’s true. Such cases have come to our notice too. In the past, such activities were conducted by illegal apps. Now it has come to light that some collection agents of legal apps are doing such activities,” said the official quoted above.

A senior official from an online lender operating through an RBI-registered NBFC said they are extremely happy that the RBI has taken the initiative to weed out illegal apps.

The market for app-based online lenders grew exponentially in India since April 2020 when the pandemic-induced lockdown and the subsequent economic recession rendered many people jobless. The banking regulator was stunned at the pace at which the apps flooded the market without much ado.

According to a research study by CloudSEK, a Bengaluru-based digital risk management company, India is the world’s biggest market for mobile lending apps on Android phones with the country home to nearly 82% of all online lenders across the globe.

The analysis by CloudSEK said India has 887 active loans apps as per the study. The US came at a distant second with 112 apps. Pakistan took the third place with 34, closely followed by South Africa (30) and Kenya (20). The study however excluded the number of apps available in China for the complexity in compiling them in the absence of available data.

In most developed markets, credit cards filled the space for quick personal loans of small amounts. In India, banks have been extremely cautious of issuing credit cards after delinquencies piled up a few years ago creating a mess for them.