The Ministry of Electronics and Information Technology (MeitY) recently issued an order to block the mobile apps LazyPay and Kissht in India. The order was given due to the apps violating specific provisions under the Foreign Exchange Management Act (FEMA) and the Prevention of Money Laundering Act (PMLA).
LazyPay and Kissht are digital lending platforms that offer quick loans to users. The apps have been popular among young consumers for their ease of use and instant loan approval process. However, MeitY has found that the apps have been flouting regulations and operating in a manner detrimental to the country’s financial stability.
The move to block the apps is seen as a significant blow to the fintech industry in India, which has been proliferating in recent years. The industry has seen a surge in the number of digital lending platforms, with many of them targeting young and first-time borrowers. However, with the government’s recent action, there is concern that other lending apps may also come under scrutiny.
It is important to note that the government’s action is not directed at the fintech industry as a whole but at the specific violation of regulations by LazyPay and Kissht. The government has made it clear that it supports the fintech industry’s growth and is keen to encourage innovation in the sector.
What were the operating mechanisms of LazyPay and Kissht?
LazyPay and Kissht were the fintech companies that provide digital credit solutions to consumers. The process of their business was as follows:
- Customer Sign-Up: Customers sign up for their services through the respective app or website and provide their personal and financial information for a credit assessment.
- Credit Assessment: The fintech companies use their proprietary algorithms to assess the customer’s creditworthiness based on the information provided and data from other sources.
- Loan Approval: If the credit assessment is successful, the customer is approved for a loan, and the amount is disbursed to their preferred payment method.
- Repayment: The customer repays the loan in instalments, typically through an automatic debit from their account or other payment methods.
- Interest and fees: Interest and fees are charged on the loan, which is pre-determined and disclosed to the customer before they take the loan.
So, LazyPay and Kissht provided digital credit solutions by quickly assessing a customer’s creditworthiness and disbursing the loan if approved, with repayment done through convenient methods along with interest and fees.
In conclusion, the blocking of LazyPay and Kissht reminds all fintech companies operating in India to ensure that they comply with the country’s regulations. The government’s action demonstrates its commitment to maintaining financial stability and protecting the interests of consumers. It is hoped that the fintech industry will take this as an opportunity to improve its standards and ensure its operations align with the country’s regulations.