Google has sent emails to several digital lending mobile applications on its Play Store, requiring their operators to submit details of their regulatory and legal status within five days. If the operators do not respond within the timeline, Google says it will remove the apps from its Play Store.
According to a screenshot of an email sent to one of the apps, reviewed by MediaNama, Google has sought details of whether these app operators have valid existing approvals or licenses from the Reserve Bank of India (RBI) to act as non-banking financial companies (NBFCs) or if they are registered under any applicable state legislation to offer such services, or if they are providing lending services as an agent of a regulated bank or NBFC.
The emails were sent out late on Wednesday night to not only illegitimate lending apps on the Play Store, but also regulated entities and fintech lenders that have legitimate operations, said Akshay Mehrotra, chief executive officer of EarlySalary and founding member of the Fintech Association for Consumer Empowerment (FACE) . “Unregulated apps can do lots of things. So when borrowing from a digital lending app, consumers should look to see if it has a FACE logo on the app. This would give the industry better control and safeguard consumers,” he said.
“As part of our ongoing sweep of lending apps, we have asked identified developers of these apps to demonstrate that they comply with applicable local laws and regulations by having them submit appropriate licenses issued by either the Reserve Bank of India or under applicable state legislations,” a Google spokesperson said in an emailed statement. Google did not respond to MediaNama’s queries as to how many digital lending apps it had notified through emails.
Lending apps have suspect interests and collection practices
Google’s policy comes in the wake of several cases of suicides and complaints of harassment against digital lending apps, which are unregulated, fly-by-the-night operations. Many of these fraudulent digital lending apps for loans for as short as 10-days to as long as 12 months at interest rates in excess of 20-30%. In case the borrower defaults, employees of these apps harass the borrower by bombarding them with text messages or turn to social media to taunt the borrower amongst their friends and family. While the RBI has strict guidelines on the interest rates that can be charge and practices to be followed by collection agents when attempting to recover or collect loan repayments, these apps use predatory tactics to earn high margins and recover the loan.
What Google’s policies on personal loan apps say
According to a blog post by Google, Play Store’s Developer Policy requires personal loan apps to disclose key information such as the minimum and maximum periods of repayment, the maximum Annual Percentage Rate, and a representative example of the total loan cost. Further, it says it only allows personal loans apps that require full repayment in greater than or equal to 60 days from the date the loan is issued to operate on the Play Store. “We believe transparency of information around the features, fees, risks, and benefits of personal loans will help people make informed decisions about their financial needs, thereby reducing the risk of being exposed to deceptive financial products and services,” Google said.
“We have reviewed hundreds of personal loan apps in India, based on flags submitted by users and government agencies. The apps that were found to violate our user safety policies were immediately removed from the Store, and we have asked the developers of the remaining identified apps to demonstrate that they comply with applicable local laws and regulations. Apps that fail to do so will be removed without further notice. In addition, we will continue to assist the law enforcement agencies in their investigation of this issue,” Google Blog
The tech giant also said that developers should only request permissions from users required to provide loans, and not gain access to user data or device data for undisclosed or disallowed purposes. “Developers must also only use data for purposes that the user has consented to, and if they later want to use the data for other purposes, they must obtain user permission for the additional uses,” it said.
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