Congress’s K C Venugopal Seeks Tough Legislation to Tackle Digital Lending App Menace

Senior Congress leader K C Venugopal has urged the Centre to urgently enact comprehensive legislation to curb the rising menace of illegal digital lending apps , citing increasing cases of financial fraud, data theft, coercive recovery practices, and cyber harassment linked to such platforms.

In a letter to Union Finance Minister Nirmala Sitharaman, the AICC general secretary called for offences such as extortion, privacy breaches, and online abuse by such apps to be treated as serious non-bailable crimes . He also proposed a Joint Task Force involving the Finance, IT and Home Ministries to dismantle illegal lending networks and freeze their financial assets.

Venugopal demanded strict enforcement of Reserve Bank of India digital lending norms , including transparency in total borrowing costs, caps on interest rates and processing fees, and prohibition on accessing sensitive user data such as contacts, photos, and personal files. He also sought stronger action against aggressive recovery agents , abusive messaging, and intimidation tactics used against borrowers.

He recommended a dedicated grievance redressal system , mandatory disclosure of emergency contacts in loan applications, and strict regulation ensuring only RBI-approved lending apps appear on platforms like Google Play Store and Apple App Store. He further called for an official verification portal and a ban on misleading advertisements and celebrity endorsements of such apps.

Meanwhile, the Centre and RBI have already intensified action through strengthened digital lending regulations, a verified lending app directory, cybercrime enforcement under IT Act Section 69A, and stricter compliance checks on regulated entities . Recent reports also highlight widespread fraud patterns, including hidden charges, high effective interest rates, and harassment of borrowers, particularly in rural and vulnerable communities.

Venugopal said he would raise the issue in Parliament, stressing the need for stronger safeguards against financial exploitation and psychological distress caused by such apps.