Asian authorities clamp down on digital lenders

The demand for credit and financing has been growing exponentially in Asia, mainly at the request of SMEs. This has matched supply to demand, so new players have entered the market. However, this has caused many illegal businesses to be created, which are notorious for preying on consumers with limited financial literacy by charging exorbitant interest rates and harvesting data from phones, used for example to embarrass debtors by calling family members.

Given this, various countries in Asia, such as India, Indonesia and China, have taken measures against illegal apps and lenders. Officials and executives alike agree that digital lenders can help address a chronic shortage of credit for the region’s fast-growing, young population — a need that has only increased during the pandemic, however it has become a necessity to regulate this growing sector.