Loan rangers

Good morning,

The RBI will soon release draft rules for banks and non-banking financial institutions that will hold them accountable for the loan apps they partner with. It’s part of a wider effort to reign in unscrupulous loan apps, many from China, that have wreaked havoc in India since the start of the pandemic.

Also in this letter:

• “Non-essential” deliveries continue
• Amazon India to vaccinate frontline workers
• IBM chief’s warning on cyberattacks

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RBI team to release draft rules on digital lending 'soon'


In January, the Reserve Bank of India (RBI) put together a team to study “all aspects” of digital lending after a slew of dubious Chinese lending apps played havoc with people’s savings -- and lives -- during India’s nationwide lockdown last year.

Now our sources tell us the central bank’s team is likely to lay out strict governance and regulatory rules for banks and non-banks that will require them to supervise entities with which they do business.

They must, among other things, ensure that lenders they work with disclose their interest rates, not misuse Android permissions, and not use unscrupulous means to recover loans.

These rules will make licensed lenders formally liable in the event that the partner loan app flouts any disclosure or collection rules.

Yes, but: The draft guidelines, which will be open for suggestions from stakeholders, are unlikely to cap interest rates or set minimum loan duration thresholds.

Big picture: The current rules prohibit anyone from commercially lending money without an RBI licence.

• The new guidelines will set the rules for apps that are the front ends of licensed banks and non-banking financial companies.
• They are likely to cover the challenges faced by the digital lending industry, and the technological competence and policy framework needed to regulate such firms.

Self-regulation and monitoring: The committee is also likely to recommend a self-regulatory body or an independent monitoring group for digital lenders. A self-regulatory body could regulate the practices around digital lending, while the monitoring group would act as a reporting body to the RBI.

However, the current version of the draft may be silent on the composition of such a self-regulatory body, a source told us.

Digital vultures: Since the start of the pandemic, thousands of unregulated loan apps have proliferated on the internet, promising quick-access loans at exorbitant rates. The entities behind many such apps used intimidation and blackmail to recover money from distressed borrowers.

We had reported last June that at least 50 loan apps had been found intimidating and threatening borrowers in India.

While the various agencies have been cracking down on these unlicensed lenders since late last year, the apps have continued to surface under different names and IP addresses.

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ETtech Done Deals


■ Car buying platform CarTrade is gearing up to file its draft prospectus for an initial public offering (IPO), from which seeks to raise around Rs 2,000 crore, three people directly involved in the process said. ET was the first to report about the company’s IPO plans on March 11, 2020.

The company recently changed its status from a private company to a public one, a prelude to an IPO, company filings sourced from business intelligence platform Tofler showed. The Warburg Pincus and Temasek-backed firm helps people buy both new as well as used cars.

Another unicorn in the making? “The company is looking at a valuation of $1.5 billion and will look at listing later in the year, depending on market conditions,” said an investment banker with knowledge of the plans. It is currently valued at $900-$950 million.

■ Online investment platform Groww has signed an agreement with Indiabulls Housing Finance to acquire its asset management company for Rs 175 crore.

This paves the way for the Sequoia Capital- and Tiger Global-backed company to enter the mutual fund business, much sought after by peers such as Zerodha. If the acquisition is approved by the regulators, Groww will become one of the first fintech startups to be a licensed asset management company.

■ Fintech startup RemitGuru is in talks to raise around $50 million or about Rs 350 crore from existing and new investors including Paytm, Infibeam Avenues, Pentathlon Ventures and investor Ashish Kacholia.

Also Read: KFin Technologies acquires 17% stake in insurtech startup Artivatic.ai

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Tweet Of The Day


Follow @ETtech for all the breaking news, insights and smart analysis on the business of technology and startups from the newsroom of The Economic Times.

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Delivery of non-essentials continues amid lack of clarity


E-commerce firms are taking orders of products ranging from electronics, books and clothing to make-up kits amid lack of clarity on delivery of non-essential goods, which some state governments have curbed, executives said.

• On Monday, Karnataka became the latest state to restrict e-commerce companies to shipping only “essentials”.

States including Maharashtra, Karnataka, Tamil Nadu, Delhi and Haryana, which have restricted activities to halt the spread of Covid-19, have allowed online retailers to ship only essential items.

By the numbers:

• A survey by community platform LocalCircles found that 48% of the respondents in Delhi said they would look to buy laptops, mobile phones or other such equipment to work from home in the next three months. In Maharashtra, this number was 60%.
• Further, 45% of respondents from Delhi and 26% from Maharashtra said they would buy air-conditioners, coolers, fans or other such white goods.

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Amazon India to vaccinate its frontline workers

Amazon said it would begin vaccinating frontline delivery workers in India through on-site vaccination camps at its buildings. The camps will first be held in Delhi and will be expanded to employees in other cities as more vaccines become available.

• This comes a month after the e-commerce giant said it would cover the cost for vaccinations of 10 lakh individuals, including its employees, service partners, sellers and their dependents.

What’s the plan? The online retailer said it will host on-site vaccination events in partnership with licensed healthcare providers. Frontline employees who don’t have access to these events will receive up to Rs 750 to get themselves vaccinated off-site.

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Infographic Insight

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Cyberattacks set to worsen, warns IBM chairman

Cybersecurity will be the pressing “issue of this decade,” Arvind Krishna, the India-born chairman of IBM, warned on Tuesday, with cyberattacks set to worsen in the coming years as hackers eye valuable data hosted on computers and enterprise servers.

• On Sunday, the US had to invoke emergency powers following a ransomware attack on oil supplier Colonial Pipeline, which disrupted nearly half the gas supplies to the East Coast. Hacker group DarkSide later claimed their goal was to make money and not create problems for society.

IBM last week unveiled a 2-nanometre chip, which consumes a quarter of the power of the current generation of chips, and is working with Samsung and Intel to manufacture them.

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German regulator bans FB from processing WhatsApp data


Facebook Inc. has been ordered to stop collecting German users’ data from its WhatsApp unit. This comes after the country’s regulator said the social networking giant’s attempt to make users agree to the practice in its updated terms was illegal.

• "This order seeks to secure the rights and freedoms of the many millions of users who give their consent to the terms of use throughout Germany," Hamburg's data protection officer Johannes Caspar said.

Concerns in India: The world’s largest messaging service unveiled its privacy policy update in India in January, granting Facebook greater access to business chats on WhatsApp.

Earlier this week, WhatsApp had said that it would not delete user accounts or limit any functionality of their app if users didn't agree to the updated privacy policy. It was originally set to take effect from February 8 but was postponed to May 15 following outrage from users.

Then last week, WhatsApp said it won't enforce the policy from May 15, though it would continue to remind users to accept it.

CCI probe: WhatsApp is also facing an antitrust probe from the Competition Commission of India (CCI), after the regulator found that the updated policy may have violated provisions of the Competition Act on abuse of dominance. While WhatsApp and Facebook challenged this decision in April, the Delhi High Court quashed their petition last month and said the CCI’s probe could go ahead.

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Top Stories We Are Covering

Aarogya Setu to help build a database of plasma donors: Contact tracing app Aarogya Setu may soon be used to create a database of plasma donors who have recently recovered from Covid-19 infections. Last week, ET reported that the Aarogya Setu app may soon become a tool to quickly access a person's vaccination status.

Amazon-backed Acko seeks new funds at $1 billion value: Acko General Insurance is weighing a new funding round that could value the Indian online insurer at more than $1 billion, reports Bloomberg. The Amazon.com Inc.-backed startup is looking to raise about $200 million in the round.

YouTube to launch $100 million creator fund for Shorts video feature: Alphabet Inc's YouTube on Tuesday announced a $100 million fund to pay content creators who make hit videos on its new short-form video feature Shorts, as YouTube aims to court more influencers.

Google Pay launches international money transfers: Alphabet Inc's Google has launched international money transfer partnerships with remittances firms Wise and Western Union Co for users of its US payments app, the companies said on Tuesday. Google Pay users in the United States can now transfer money to app customers in India and Singapore.

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Global Picks We Are Reading

■ Apple rejected almost 1 million apps in 2020, explains common reasons why (CNBC)

■ Thiel-backed Block.one injects billions in crypto exchange (Bloomberg)

■ TikTok launching jobs service for Gen Z (Axios)

Today’s ETtech Morning Dispatch was curated by Zaheer Merchant and Karan Dhar in Mumbai