On Thursday, Google India removed many rapid lending apps from the Play Store for violating its user safety regulations, and it is investigating hundreds of more apps for violating the conditions of its Android platform, which is used by 96 percent of India's smartphone users.
Many of these app-based lenders were using extreme measures like harassment and public humiliation to collect a pile of past-due personal loans, even while delinquent borrowers dealt with wage cuts and job losses as a result of the pandemic. At least one of the borrowers committed suicide as a result of the harassment, drawing regulatory attention.
Google stated in a blog post that it has also requested proof of compliance with Indian laws and regulations from lending apps. "Apps that do not comply will be withdrawn without warning." Furthermore, we will continue to help law enforcement officials in their investigations into this matter," the blog post stated.
Google has announced that from now on, the Play Store will only allow loan apps that require customers to repay loans after 60 days or longer. Instant lending applications must display the minimum and maximum repayment durations, the maximum annual percentage rate, and a realistic example of the entire loan cost, according to Google's regulations.
The founder of a fast loan app told Mint that his company received an email from Google in December inquiring if it had a non-banking financial company (NBFC) licence. He stated that the firm had given them five days to react with the necessary papers, failing which the programme would be removed from the Play Store. According to industry sources, Google's approach will aid in the development of standard standards in the digital lending industry, as well as improved monitoring, given that regulatory oversight is often difficult due to the technical issues involved. "According to Indian law, all lending applications must be backed by a bank or a non-bank financial company (NBFC) that is registered with the RBI and obey its rules and regulations. Lending methods must be transparent, and any form of unethical collection must be avoided at all costs. "All digital lenders must guarantee that the fees they impose are reasonable and that they adhere to all policies, including the RBI's fair practise policy," said Yogi Sadana, CEO of digital lending app CASHe and a founding member of the Fintech Association for Consumer Empowerment.
In recent months, there have been an increasing number of complaints about app-based lenders using strong-arm techniques to get access to a customer's social media accounts and phone contact lists as part of the credit underwriting process. According to the Times of India, a Hyderabad-based software engineer who sought rapid loans through various apps committed himself when private financiers allegedly insulted him in public.
The Reserve Bank of India announced on Wednesday that it has formed a working group to deliver a report on the operation and regulation of digital lending apps within three months. "While the adoption of digital means in the financial sector is a positive trend, the benefits and associated risks are frequently intertwined in such endeavours," the central bank stated. The panel will be chaired by RBI executive director Jayant Kumar Dash. External participants include Vikram Mehta, co-founder of Monexo Fintech, and Rahul Sasi, a cybersecurity expert and creator of CloudSEK.
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