Wednesday, 2023 March 29

India contemplates banning digital lending apps with links to China

After banning 177 Chinese apps since June including WeChat, PUBG, and TikTok after a series of intensifying border clashes with China, the Indian government moved to target fintech startups in the country that have connections with Chinese nationals or companies on grounds that these apps might collect sensitive customer data.

And in its bid to ensure that no consumer data are being accessed, Indian government is compiling a list of app-based lending companies that are connected with China, said a report by local media Mint citing two sources.

“The potential implications of a data compromise from fintech such as lending apps are quite grave since it involves sharing sensitive financial data of the user to the lender,” one of the sources told Mint.

The new-age digital lending startups that have mushroomed in the country over the last two years often collect user data such as Unique Identity (UID) number or Aadhaar, PAN card number to find out their details with the income tax department, among other things.

“What has set the alarm bells ringing is the presence of Chinese nationals as directors in several of these lending apps,” the source said. “The government is trying to ascertain the reasons behind it.”

“The central bank does not regulate such entities because there are no public deposits involved. RBI can, however, alert the central government and the respective state governments if it finds something suspicious,” said another source. “This regulatory grey area could have implications from an espionage perspective.”

Manu Zacharia, a cybersecurity researcher, claimed in an interview with Mint that China “has a national campaign to gain access to data of citizens across the world” and said that he won’t be surprised if these companies have links to the Chinese government.

In June, TikTok India said in a statement responding to the Indian ban saying that it “has not shared any information of our users in India with any foreign government, including the Chinese government” and they will not comply if being requested so.

Moulishree Srivastava
Moulishree Srivastava
In-depth, analytical and explainer stories and interviews on technology, internet economy, investments, climate tech and sustainability. Coverage of business strategies, trends in startup and VC ecosystems and cross-border stories capturing the influence of SEA, China and Japan on the local startup industry.
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