Some loan apps thrive on Google Play in India despite policy violations
MUMBAI: At least 10 Indian loan apps on Google’s Play Store, which have been downloaded millions of times, violated Google’s rules on loan repayment terms aimed at protecting vulnerable borrowers, according to a Reuters review of these services and more than a dozen users.
Four apps were pulled from the Play Store – where the vast majority of Indians download phone apps – after Reuters reported to Google they were violating its ban on offering personal loans that require full repayment in 60 days or less.
Three of those apps – 10MinuteLoan, Ex-Money, and Extra Mudra – did not respond to calls and emails seeking comment.
The fourth app, StuCred, was allowed to return to the Google Play Store on January 7 after withdrawing the offer from a 30-day loan. He denied engaging in unscrupulous practices.
At least six other apps remain available in the store and offer loan repayment terms, some as low as seven days, according to 15 borrowers and screenshots of loan details from the six apps shared with Reuters.
Some of these apps charge a high processing fee of up to 2,000 rupees (US $ 27) on loans under 10,000 rupees with terms of 30 days or less, depending on the 15 borrowers. Along with other fees, including a one-time registration fee, borrowers can pay, in real terms, interest rates of up to 60 percent per week, depending on their loan details.
For comparison, Indian banks typically offer personal loans with annual interest rates of 10-20%, and they usually don’t have to be fully repaid for at least a year.
The Reserve Bank of India (RBI), the banking regulator, did not respond to a request for comment on its intention to strengthen supervisory measures. In December, it issued a public notice on app lending, warning some to engage in “unscrupulous activities,” such as imposing excessive interest rates and fees.
Google, which dominates the Indian app market with more than 98% of smartphones using its Android platform, said its policies were “continually updated in response to new and emerging threats and bad actors.”
“We take action on apps reported to us by users and regulators,” he added.
When contacted by Reuters, apps offering short-term warrants denied the wrongdoing or did not respond.
The apps, many of which serve as intermediaries between borrowers and lending institutions, do not break the law because the RBI does not have rules regarding minimum loan terms. The RBI also does not oversee intermediaries.
India’s Ministry of Finance and Ministry of Information Technology did not respond to requests for comment on their plans to increase control over these apps.
Some consumer activists argue that short-term or payday loans can cause borrowers to default on payments and increase costs.
“Predatory loan apps with high processing fees, short terms and high default penalties lead people into a debt trap,” said Pravin Kalaiselvan, who heads 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 resulted in a proliferation of hundreds of personal loan applications in recent years. Campaign groups say rapid technological advances have overtaken the authorities and are calling for the introduction of regulations regarding loan terms and fees.
“There are no clear standards on app lending in India. At the moment, they fall into a gray area,” said Nikhil Pahwa, digital rights activist and publisher of MediaNama, a Delhi-based publication. on technology policy.
The four apps that violated Google’s repayment term policy – 10MinuteLoan, Ex-Money, StuCred, and Extra Mudra – were advertising 30-day loan terms on their apps and had been downloaded at least 1.5 days. million times.
Reuters reported these apps to Google on December 18, and they were removed from the Play Store in India within four days.
Responding to a request from Reuters on whether it had offered loans requiring full repayment in 60 days or less, StuCred said: “Google has unilaterally decided that fintech apps cannot be on their app store whose refunds are less than 30 days, although no law relating to the same has been passed that would require such action on their part (from Google).
Several other apps indicate on their Play Store listings that the minimum repayment term they offer is over three months, but in reality, their length often ranges from seven to 15 days, depending on the 15 borrowers and their screenshots.
These apps include CashBean, Moneed, iCredit, CashKey, RupeeFly, and RupeePlus, which have been downloaded almost 12 million times in total.
Moneed said he follows RBI rules and any company that doesn’t should be allowed to do business. Responding to a request from Reuters on whether he had offered any loans requiring full repayment in 60 days or less, he said: “We support 90-day repayment for the loan cycle.”
CashBean also said it was following RBI guidelines. “Our customer service lines are open to all of our borrowers at all times,” he added. He did not directly answer the question of 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.
The loan application industry has separately drawn the attention of police who say they are investigating dozens of applications following the suicides of at least two borrowers in the past month after they themselves and their families were reportedly harassed by debt collectors.
Police did not disclose the identity of those under investigation.
Harassment for debt collection is prohibited by RBI rules which state that debt collectors cannot harass borrowers by “persistently disturbing” them, or by contacting family or acquaintances.
Reuters’ review of 50 popular loan apps available on Google Play found that almost all of them require borrowers to give them permission to access their phone contacts.
Mahesh Dommati, a 28-year-old technician in Hyderabad who lost his job during the COVID-19 lockdown, was unable to repay the Rs 6,000 loan he took from an app called Slice. He said recovery agents used his contact list to repeatedly call family and friends, demanding that they pay on his behalf.
Slice said he follows RBI rules and does not engage in harassment.