OUTLOOK: Some lending apps thrive on India’s Google Play despite policy violations


By Nupur Anand

MUMBAI, Jan 11 (Reuters) – At least 10 Indian loan apps on Google’s Play Store, which have been downloaded millions of times, have violated Google’s rules on the duration of loan payments aimed at protecting vulnerable borrowers, according to a Reuters review of such services and more. of a dozen users.

Four apps have been removed from the Play Store, where the vast majority of Indians download phone apps, after Reuters told Google they were violating its ban on offering personal loans that require full payment in 60 days or less.

Three of these apps, 10MinuteLoan, Ex-Money and Extra Mudra, did not return calls or emails seeking comment.

The fourth app, StuCred, became available again on the Google Play store on January 7 after it removed the 30-day loan offer. He denied engaging in unscrupulous practices.

At least six other apps remain available in the store that offer loan repayment terms, or terms, some as short as seven days, according to 15 borrowers and screenshots of loan details from the six apps shared with Reuters.

Some of these applications carry high processing fees, of up to Rs 2,000 ($27) on loans of less than Rs 10,000 with terms of 30 days or less, depending on the 15 borrowers. Along with other fees, including one-time registration costs, borrowers can pay, in real terms, interest rates of up to 60% per week, their loan details show.

By comparison, Indian banks typically offer personal loans with annual interest rates of 10% to 20% and typically do not have to be paid in full for at least a year.

The Reserve Bank of India (RBI), the banking regulator, did not respond to a request for comment on whether it planned to step up supervisory action. In December, it issued a public advisory about loan applications, warning some people involved in “unscrupulous activities” such as charging excessive interest rates and fees.

Google, which dominates India’s app market with more than 98% of smartphones using its Android platform, said its policies are “continuously updated in response to new and emerging threats and bad actors.”

“We take action on apps that are flagged to us by users and regulators,” he added.

When contacted by Reuters, the apps offering short stays either denied wrongdoing or did not respond.

The apps, many of which act as intermediaries connecting borrowers with lending institutions, are not breaking the law as the RBI has no rules covering the minimum duration of loans. The RBI also does not supervise brokers.

India’s Ministry of Finance and Ministry of Information Technology did not respond to requests for comment on whether they planned to increase scrutiny of these apps.

Some consumer advocates say short-term, or payday, loans can lead borrowers to default and spiral costs up.

“Predatory loan applications with high processing fees, short tenures and high default penalties are leading people into a debt trap,” said Pravin Kalaiselvan, who runs a digital rights group, Save Them India Foundation.

Google introduced its own global policy for its platform in 2019 “to protect users from harmful or deceptive practices.”

The rise of smartphones and affordable mobile internet in India has seen a proliferation of hundreds of personal loan apps in recent years. Campaign groups say rapid advances in technology have outpaced authorities and are calling for regulations to be introduced regarding loan holding and fees.

“There are no clear rules on app lending in India. Right now, they are in a gray area,” said Nikhil Pahwa, a digital rights activist and editor of MediaNama, a Delhi-based tech policy publication.

‘UNILATERALLY DECIDED’

The four apps that violated Google’s payment term policy (10MinuteLoan, Ex-Money, StuCred and Extra Mudra) advertised 30-day loan terms on their apps and had been downloaded a total of at least 1.5 million times. .

Reuters flagged those apps on Google on December 18 and they were removed from the Play Store in India within four days.

In response to a query from Reuters about whether it had offered loans that required full payment in 60 days or less, StuCred said: “Google has unilaterally decided that fintech apps cannot be in its app store that have payouts in less than 30 days. days, even though there is no law. related thereto that would require such action on your (Google’s) part.”

Several other apps say in their Play Store listings that the minimum payment duration they offer is more than three months, but in reality their terms often range from seven to 15 days, according to the 15 borrowers and their screenshots.

Those apps include CashBean, Moneed, iCredit, CashKey, RupeeFly, and RupeePlus, which have been downloaded a total of nearly 12 million times.

Moneed said he adhered to the RBI rules and any company that did not should not be allowed to do business. In response to a Reuters query about whether he had offered loans that required full payment in 60 days or less, he said: “We support 90-day repayment for the loan cycle.”

CashBean also said that it followed the RBI guidelines. “Our customer service lines are open to all of our borrowers at all times,” he added. He did not directly address a question about whether he offered loan terms of 60 days or less.

CashKey, iCredit, RupeeFly and RupeePlus did not respond to emails seeking comment and were not reachable by phone.

HARASSMENT INVESTIGATIONS

The loan application industry has separately drawn scrutiny from police who say they are investigating dozens of applications following the suicides of at least two borrowers in the past month after they and their families were allegedly harassed. by debt recovery agents.

Police have not released the identities of those under investigation.

Harassment for debt recovery is prohibited under RBI rules, which state that collection agents may not harass borrowers by “constantly harassing” them or by contacting family members or acquaintances.

Reuters’ review of 50 popular lending apps available on Google Play found that nearly all of them require borrowers to give them permission to access their phone contacts.

Mahesh Dommati, a 28-year-old tech worker from Hyderabad who lost his job during the COVID-19 lockdown, was unable to repay the Rs 6,000 loan he had taken from an app called Slice. He said recovery agents used his contact list to repeatedly call his family and friends, demanding that they pay on his behalf.

Slice said he complied with RBI rules and did not engage in harassment. (Reporting by Nupur Anand; additional reporting by Jatindra Dash and Sudarshan Varadhan; Editing by Euan Rocha and Pravin Char)

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