Government to scrutinise fintech companies for security, privacy breach: Report

The government has turned its scrutiny on fintech apps with Chinese links for data and privacy breaches, Mint reported.

App-based lenders with Chinese links will most probably be banned by the the Central Government similar to the ban on 177 Chinese apps after clashes with China on the border in June.

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

“The kind of data one provides to fintech firms is riskier than what one would share on social media networks. Data on income tax, Aadhaar card and other details are taken by these app-based lenders."

Another source told the website that the presence of Chinese nationals as directors in these companies is alarming and that the government is trying to ascertain the reason behind this. For instance, a Thane-based company, which operates a lending app, has a Chinese director. Similarly, a Bengaluru-based company, which runs a lending app, has two Chinese directors.

According to the report, central banks do not have powers to regulate such companies as no public deposits are involved.

“RBI can, however, alert the central government and the respective state governments if it finds something suspicious," another source told the publication. “This regulatory grey area could have implications from an espionage perspective."