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Mumbai: Google has begun to remove money-lending apps that do not comply with the country’s banking regulations from its Android Play Store following directions from the Reserve Bank of India (RBI) to monitor the glut https://paydayloanstennessee.com/cities/dresden/ of fintech applications hosted on the search giant’s platform.
In an exercise that began on Wednesday evening, over 30 lending apps have been taken down from the Play Store, people directly aware of the development told ET.
In a virtual meeting held earlier in January, RBI officials had alerted Google to hundreds of fintech loan applications that were live on the Play Store despite being non-compliant with local laws, two people aware of the discussions said.
“The (banking) regulator has communicated its unhappiness over the proliferation of unregulated fintech apps on Google Play Store and advised them to take such applications down,” a source said.
ET has learnt that Naspers-backed PayU’s credit platform LazyPay has been taken down from the Play Store for violation of the said norms.
“We are working with Google to complete the documentation and will have the app up and running shortly,” the spokesperson added.
Apps such as Cashguru, 10MinuteLoan, Rupeeclick, Finance Buddha among others have also been removed in the last few days as per a list curated by policy researcher Srikanth L of Cashless Collective.
The RBI “also called a (separate) meeting with several fintech lenders last week to take their inputs to regulate the sector better and has announced the setting up of a working group,” said one official cited above.
RBI did not reply to email queries. While a representative for Google directed ET to a blogpost by Suzanne Frey, vice-president for product, Android security and privacy, which stated that “hundreds of personal loan apps” are being reviewed based on flags received by users and government agencies.
Google removes 30 loan apps from Play store after RBI red flag
“The apps that were found to violate our user safety policies were immediately removed from the Play Store, and we have asked the developers of the remaining identified apps to demonstrate that they comply with applicable local laws and regulations,” Frey wrote in her blog on Thursday.
As part of the ongoing review, Google India has placed the onus for compliance on lending applications that are still live on its app store, asking them to establish their credentials and prove their compliance with relevant local laws.
In mails that are being sent to fintech app developers, the internet giant states that: “We have been alerted that the above app may be in violation of local laws…we ask you to confirm within five days of this mail whether you hold valid existing approvals or licences from the RBI to act as an NBFC or are registered under any applicable state legislation to offer such services, or are offering services on your app as a designated agent of a registered NBFC/bank.”
The email also states that failure to provide these disclosures within the stipulated five-day period will lead to the takedown of the app.
Google India began sending these emails on Wednesday evening, said a chief executive of a licensed fintech non-banking financial company.
To be sure, Google Play’s Developer Policy mandates personal loan apps to disclose information such as repayment tenure, interest rates and the name of licensed NBFC partnership.
“We only allow personal loan apps with full repayment required in greater than or equal to 60 days from the date the loan is issued…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,” Frey stated on her blog.
Concerns surrounding digital lending through mobile apps first surfaced in 2020 after the onset of the pandemic triggered mass defaults. ET reported in June that at least 50 loan apps were resorting to intimidation and cyber bullying tactics that in extreme events had even led to suicides in some states.
“The regulator has swung into action since the suicide incident happened in Andhra Pradesh. There has been a lot of to-and-fro between the lenders and the RBI over the recovery mechanisms they use and several inputs have been taken from us and the fintech association for consumer empowerment,” said a person in the know of the matter.
On Wednesday, the central bank constituted a working group to come up with regulations for digital lending through mobile apps.
According to Srinath Sridharan, a member of governing council of FACE, an industry association of digital lenders, “the challenge is to distinguish between good actors and bad actors in the space.” “This is a broader issue concerning supervision of NBFCs. The central bank could take a digital approach to track compliance on a real-time basis by licensed NBFCs,” he said.
There is no official count of how many such digital lending apps exist. However, industry insiders peg the number at several hundred while the count of licensed NBFC is close to 10,000.
According to Amit Das, founder of alternate credit platform Algo360, enquiries recorded at credit bureaus for digital loan origination have risen to 15-20 % of all total queries from just 2% a few years ago.
“The scale of the operations of these lenders have really increased since the onset of the pandemic,” said Das. The digital lending apps predominantly target blue-collar and self-employed segments with the promise of easy liquidity.