The Government of India has informed the Lok Sabha that the Ministry of Electronics and Information Technology (MeitY) has blocked 87 illegal digital lending applications following a regulatory review conducted under Section 69A of the Information Technology Act, 2000. This disclosure came through a written reply to an unstarred question directed to the Minister of Corporate Affairs on December 1, offering both clarity and insight into the multi-layered enforcement actions taken to curb illicit financial activities proliferating through online platforms.

The parliamentary question sought to understand whether the government intended to define the term “shell companies” in the Companies Act, 2013, and what mechanisms were being adopted to strengthen the monitoring of non-functional firms to prevent illegal operations, including those executed through digital loan apps. In response, the Ministry of Corporate Affairs outlined a broad spectrum of regulatory interventions and clarified the government’s position on defining shell companies, the ongoing scrutiny over corporations, and the steps taken to protect consumers in the digital lending ecosystem.

Addressing the query, the Ministry emphasized that regulatory measures are regularly undertaken against companies involved in online lending and that action is triggered whenever violations are brought to notice. Significantly, the ministry clarified that the Companies Act, 2013 does not define the term “shell company,” nor is there any proposal under consideration to insert such a definition. This position aligns with the government’s consistent stance that instead of creating a rigid definition, it is more effective to identify suspicious entities based on behavior patterns, compliance failures, and financial irregularities observed through investigations and audits.

The reply detailed the enforcement framework through which corporate irregularities are addressed. According to the Ministry, inquiries, inspections, and investigations are initiated based on complaints, references from departments, or other information suggesting non-compliance. These inquiries can lead to a variety of corrective actions, including warnings, penalties, prosecution, or even striking off a company from the official registry. By drawing attention to this process, the government underscored that corporate oversight is an ongoing, dynamic exercise rather than a one-time intervention.

However, the most significant revelation in the reply was the confirmation that MeitY has blocked 87 illegal loan apps operating in violation of Indian law. The ministry invoked its powers under Section 69A of the IT Act, which allows the government to block public access to digital content deemed harmful, fraudulent, or threatening to national security or public order. This move is part of a broader crackdown on predatory digital lending platforms that have proliferated rapidly over the past several years, often operating without proper licensing or regulatory oversight.

These illegal loan apps have drawn widespread criticism for unethical collection practices, privacy violations, astronomical interest rates, and harassment of borrowers. Several such apps have been linked to financial crimes, identity theft, extortion, and even cross-border cyber fraud networks. Against this backdrop, the decision to block 87 apps reflects the growing coordination between the Ministry of Corporate Affairs, MeitY, enforcement agencies, the Reserve Bank of India (RBI), and state police departments.

The government’s reply also reaffirmed that such regulatory actions are not isolated events but part of a continuous monitoring cycle. Inspections and compliance checks are conducted regularly, particularly in high-risk sectors such as digital finance, where consumer vulnerability is high and regulatory gaps are often exploited. The reply emphasized that these measures aim to strengthen corporate accountability, safety in digital transactions, and the integrity of India’s financial ecosystem.

The decision to block illegal lending apps comes at a time when digital lending has seen exponential growth in India, spurred by increased smartphone penetration, easy access to the internet, and the rise of fintech platforms offering instant credit solutions. While this sector has contributed to financial inclusion and innovation, it has also attracted unregistered operators seeking to exploit regulatory loopholes and vulnerable borrowers. Reports from various states have documented cases where borrowers faced severe harassment, misuse of personal data, and coercion by unlicensed loan app operators. In extreme cases, this has even led to suicides, prompting heightened scrutiny.

The government’s actions under Section 69A demonstrate how legal provisions relating to online content regulation can be used to safeguard economic security. This provision, originally intended to address cyber threats, misinformation, and harmful content, has increasingly been applied to financial fraud and illegal online operations. The blocking of these 87 apps is significant because it sends a strong signal that digital lending must adhere to Indian laws, and any platform bypassing norms will face swift and decisive action.

At the policy level, the Ministry of Corporate Affairs also reiterated in its reply that it continuously works to strengthen corporate governance frameworks, ensuring that companies remain compliant with the law. The reliance on risk-based inspections and analytical tools reflects a shift towards a more data-driven, modern approach to corporate regulation. It also aligns with the government’s broader aim of ensuring that India’s digital and financial sectors remain secure, transparent, and conducive to genuine innovation.

In conclusion, the government’s latest disclosure to Parliament represents another step in its effort to regulate the fast-growing digital lending landscape and curb illegal financial activities conducted under the guise of fintech operations. By blocking 87 illegal loan apps, reinforcing compliance mechanisms, conducting inspections, and maintaining vigilance over suspicious corporate entities, the government has reaffirmed its commitment to protecting consumers and improving accountability in India’s corporate and digital sectors. While the absence of a formal definition for shell companies remains unchanged, the government’s emphasis on targeted, behavior-based enforcement provides a flexible and effective approach to identifying and addressing illicit corporate activities. As digital financial services continue to expand, sustained regulatory oversight and inter-ministerial coordination will remain crucial to safeguarding the interests of millions of consumers who rely on online platforms for credit and financial transactions.