Google blocked 2,000 personal loan apps from India Play Store from January-July

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Technology giant Google blocked 2,000 personal loan providers from its app marketplace in India from January to July, after they were found to be in violation of its policies.

“A big bulk of the loan apps in the Play Store were taken down… I would say more than 50 percent of them (were in violation of Google’s policies),” said Saikat Mitra, Senior Director and Head of Trust and Safety at Google Asia-Pacific.

Mitra said that the company was working with several stakeholders like government agencies, media and user referrals, apart from deploying its artificial intelligence/machine learning capabilities, to penalise bad actors on the Play Store.

“This kind of issue gets boxed more easily in Indonesia where only government-certified apps can lend,” added Mitra.

The company said that the app take-downs were not linked to predatory loans, although this issue has compelled government agencies and the central bank to tighten norms over the past year. The tech giant also maintained that it does not actively track whether the blocked loan apps or their developers are from China.

Earlier this year, the company had announced that it would require personal loan apps in India to complete the additional proof of eligibility requirements.

The eligibility includes a copy of their license by the Reserve Bank of India (RBI), and a declaration that they are not directly engaged in money lending activities and are only providing a platform to facilitate money lending by registered Non-Banking Financial Companies (NBFCs) or banks to users.

The rise in digital lending by unregistered and fraudulent apps has been a major concern that has had the government, the Reserve Bank of India (RBI) as well as the Directorate of Enforcement (ED) in a bind. The issue began back in 2020 when instances of high-handed loan recovery methods by these apps that lend to unsuspecting customers at high rates pushed many to suicide.

Instances of harassment, and pushing customers to die by suicide still continue to grab headlines. Google India had previously said that it has reviewed hundreds of personal loan apps and those who were found violating the user safety policies were immediately removed from its play store.

The funding and origin for these apps have been traced to China and have also led to investigations by the Serious Fraud Investigation Office (SFIO), Intelligence Bureau and even R&AW. In a recent investigation, News18 reported that the apps are backed by registered fintech companies that are in turn backed by shell companies, numbering 100 in some instances. In several of these cases, hundreds of companies were found operating from a single address in Delhi-NCR and residential areas of Bengaluru.

In a bid to regulate the space, the RBI also released a list of guidelines for digital lending on August 10. However, the regulator only has jurisdiction over RBI-registered entities. These fake loan apps eventually can evade the guidelines as most of those are not registered with the RBI.

On August 2, Finance Minister Nirmala Sitharaman informed the Rajya Sabha that the government is taking action against dubious digital loan apps, including those originating from outside the country, and also Indians who helped in setting them up.

The Ministry of Finance, Corporate Affairs, Ministry of Electronics and Information Technology and a few other departments, inclusive of Home, are all constantly discussing and working to ensure action is taken in these cases, she said.