The lifting of the ban by the Indian IT ministry on seven high-profile lending apps comes as some relief to the fintech industry which has been reeling under immense scrutiny in recent quarters. The fintech sector had been facing a ban introduced by the Indian IT ministry in January this year, following reports that several of these platforms were involved in fraudulent and unethical practices. However, recent reports suggest that many of these platforms have undergone changes and are now legitimate players in the lending space. With more regulation coming down from various quarters, it will be interesting to see how these companies fare moving forward.
The IT Ministry’s decision to lift the ban on three online lending firms is a sign that the government is warming up to the idea of online lending as an alternative financing option for small businesses. The ban was imposed after it was discovered that many of these firms had Chinese investors on their cap tables, which raised concerns about potential money laundering and national security risks. However, the firms justified that they did not have Chinese investors on their cap tables, deeming them ineligible for the ban. This suggests that the government may be more tolerant of online lenders in future, as long as they can convincingly prove that their operations are clean and without any hidden dangers.
Several Indian states have banned over 90 lending apps in the past few weeks, citing concerns about Chinas growing influence in the South Asian market. This ban appears to be a response to Beijing’s aggressive investment and commercial activities in the region. India is endeavoring to create a market where Chinese companies can’t compete, whilst protecting its own integrity and economy.
The IT Ministry is worried about the potential for Chinese investors to gain undue influence over some lending apps in India. This could lead to possible unfair practices and distortion of the market, which would undermine the foundations of a free and fair economy. The ministry is urging app developers to take steps to prevent such interference and protect Indian consumers from harm.
Cybersecurity experts say that the increasing reports of cybercrimes linked to China may be a result of Beijing’s ongoing efforts to bolster its economic power in Asia. The Ministry of Home Affairs has said that Chinese firms are accessing Indian lending apps and storing data about Indian consumers outside of India, which is likely an attempt to gain an advantage in the market.
Kissht’s spokesperson confirmed that the ban on its website and app had been lifted. After thanking the Government of India and MeitY for revoking the order to block Kissht, Kissht plans to resume operations as usual.
Kissht expanding its reach to serve even more Indians with financial inclusion is commendable, and the company’s easy-to-use credit product is much appreciated. With a goal of doubling their customer base by 2023, Kissht has huge potential to contribute significantly to the country’s economy.