Background

As per reports from several media outlets, the Ministry of Electronics and Information Technology (MeitY) issued orders to block over 230 applications/ platforms, after receiving instructions from the Ministry of Home Affairs (MHA). The list of banned apps reportedly include around 138 offshore betting and gambling platforms and approximately 94 apps that provide unauthorised loan services. While several anonymous sources have informally revealed the reasoning behind banning these apps, MeitY has not yet furnished an official reasoning and justification for the action taken. On February 05, this information was shared by the state-owned public service broadcaster, Prasar Bharati.

Today, on February 10, Economic Times reported that MeitY might revoke the ban on some of the digital lending apps and websites. This news comes approximately 2 hours after Economic Times, citing an unnamed senior government official, reported that “the Centre has banned only those lending platforms which were not following the laws of the country and its regulators with respect to monetary transaction”. It further stated “If they were legitimate, we would not have banned them”. Such adhoc actions, absence of clarity and abrupt reversals stem from a lack of transparency, accountability and insufficient regard for due process.

The issue of illegal loan apps has been discussed previously by the MeitY and the Reserve Bank of India (RBI), etc. In a high level meeting chaired by the Union Finance Minister dated September 08, 2022, concerns around these apps offering quick ‘microloans and credit to low-income groups at extortionate interest rates and processing fees’, and employing ‘predatory recovery practices involving blackmailing and criminal intimidation’ were noted. Among the several actionables of the meeting, the RBI was tasked with creating a ‘whitelist’ of all the legal apps and MeitY was supposed to ensure that app stores host only the whitelisted apps.

MeitY has reportedly also shared the RBI’s list of digital lending apps being used by regulated entities with certain intermediaries such as internet service providers and app stores, requesting them to ensure that their platforms host only these apps. MoneyControl has reportedly accessed a partial list of 58 such banned apps. Although TechCrunch too claimed to have seen a copy of the list, it is yet to be officially published. Blocking orders passed under Section 69(A) of the IT Act, 2000, such as this one, are unfortunately often kept confidential and not publicly released.

MeitY requesting app stores to host only those apps which figure in the RBI’s ‘whitelist’ raises questions on MeitY’s powers to share such an ‘allowlist’ with intermediaries. It is also unclear on what basis or guidelines is MeitY disallowing these intermediaries from hosting apps which aren’t included in the list. In absence of clear and reasonable guidelines furnished by the government, any such decision may be influenced by considerations/ negotiations that are not aimed at protecting the digital and constitutional rights of citizens. Furthermore, it provides increased discretion to app stores on deciding which apps they would host. This may have the unintended consequence of apps facing differential treatments. In this case as well, while Google is still reviewing the list shared by MeitY, other apps stores may have already chosen to remove un-regulated apps from their platforms. Moreover, given that this was not a blocking order issued by MeitY under Section 69A, clear guidelines on following such directions from the government need to be published. IFF is also filing an RTI application to seek clarity on this matter. This essentially sets a negative and concerning precedent wherein any public authority may in the future share with MeitY a list of the licensed or regulated entities, which MeitY would in turn issue without any clear regulatory power or clear application of its own mind.

Why the ban?

Prasar Bharti, in its coverage of the matter, reportedly said that MeitY’s move is aimed at ‘protecting the nation’s integrity and curb China’s influence in the South Asian market’. As per an unnamed official from the Ministry, another possible explanation for the bans is the rising reports of cybercrimes linked to China. The Economic Times was told by an anonymous official that these apps were banned on an “urgent” and “emergency” basis for improper data storage and transfer to other countries as well as money laundering’. Another official told the news outlet that, according to the government, these apps contained ‘material which is prejudicial to the sovereignty and integrity of India’.

This is not the first time that the government has banned apps which have ‘links to China’. In June 2020, the government banned Tik Tok, among other 59 apps, for geopolitical reasons. Such use of common, aggregated reasons for banning apps on scale go against the individualised nature of the blocking power under Section 69A of the IT Act and the Blocking Rules, 2009. Many of the harms caused by apps need to be individually studied and addressed by a mix of policy and regulatory responses. The June 2020 decision was accompanied by a press release, which listed all the 59 apps that were banned. Similarly, in September and November 2020, the decision to block 118 and 43 apps respectively were accompanied by a press release. However, this is not always the case. In at least two other instances, the decision to block apps (once in July 2020 and once in February 2022) was also not accompanied by a press release.

The most recent ban was initially reported to have affected only those apps which were from or had links to China. However, it was soon evident that even lending apps from India were banned, such as buy-now-pay-later service Lazy Pay, instant credit app and lending platform Kissht, and Indiabulls Home Loans.

While one unattributed quote justified MeitY’s action by referring to the ‘sketchy loan-collection practices and customer services’ of these apps, another unattributed quote stated that this action was ‘an editorial error [following] complaints against similar sounding apps’.

The inconsistency among the statements given by ‘anonymous officials’ is a reminder of the fact that there is no transparency in the process through which and the reason(s) for which these apps have been banned. Transparency in disclosures of the actual blocking orders as well as the detailed, clear reasoning behind such blanket bans may help affected parties seek remedies if they believe that the actions are not justified. This further raises concerns around the general lack of accountability as well as MeitY’s non-adherence to due process of law and the procedural safeguards established under Blocking Rules, 2009 as well as Shreya Singhal vs. Union of India.

Our views

While we acknowledge the legitimate concerns around harms to the privacy & security of users, it is also important to highlight additional concerns which arise as a result of such unpredictable bans. These concerns include, but are not limited to, the restriction of the right to receive information, hindered ability to use such services, and negative impact on innovation, reputation, and growth. We firmly believe that such bans stifle innovation and are harmful to the growing technological ecosystem of the country.

We have previously written to MeitY, following the ban of Tik Tok arising from a Madras High Court order in 2019, stating that such wholescale ‘app bans’ are reactionary, absolute prohibitions, and disproportionate. We expressed our concern that ‘app bans’ may slowly emerge as a standard practice and that this has worrying implications beyond specific companies and applications to the rights of internet users in India. In a statement we released in July 2020, after the government banned 59 mobile applications, we expressed our concern around the legality of the blocking process. Our concerns persist as per our reading of Section 69A, it does not extend to directions for blocking smartphone applications but instead is limited to individual pieces of information and content. This continues a worrying precedent and tremendous expansion of the power to block web services in India.

Our stance remains the same even today. We request the Government of India to publish official, legal orders and make proper disclosures, even with respect to its un-blocking orders. We further urge that specific regulatory instruments such as data protection legislation aimed at safeguarding individual privacy must be advanced. Concerns raised by several anonymous officials could also be resolved through regulatory processes that emerge from objective, evidence based measures, instead of opting for a total ban. This ensures credible action that protects individual liberty, innovation, and security interests. In a letter dated July 31, 2020, we wrote to MeitY suggesting that instead of formalising a ban regime, the government should direct its efforts towards both coming up with progressive reforms, and expediting important policy processes for the formulation of institutional frameworks of enforcement.