Google imposes new rules on personal loan apps in India
Predatory lending by loan apps has been a major issue in India. There have been calls to deal with lenders that harass borrowers. Heeding those calls, Google tightened its Personal Loans policy for apps on Play Store last month. The tech giant's new policies are effective from today (May 31). Let's see what it means for the companies as well as users.
Why does this story matter?
During the pandemic, several apps came up in India offering instant loans. The economic downturn during lockdowns forced many people to depend on these apps. Many of them popped up without any regulatory compliance. After a while, several people complained about predatory and abusive actions by these apps. This is what brought the Centre and other stakeholders like Google into the picture.
Google had multiple deliberations with the government about rules
The problem of loan apps has been going on for a while. In February 2023, the Indian government blocked 94 Chinese apps. There has been a lot of pressure on Google to take strict action against such applications that flout rules. Google has had multiple deliberations with the government and the Reserve Bank of India (RBI) about updating policy to weed out illegal apps.
Personal loan apps have to submit a declaration
Google's new policy will affect apps that "offer loans directly, lead generators, and those who connect consumers with third-party lenders." Loan apps have to complete Google's Personal Loan App Declaration for India and submit the necessary documentation. Without a successful declaration, the app won't be published on Google Play Store. Also, the developer's account name must match the registered business name.
Loan apps cannot access sensitive personal information
The purpose of the new policy is to ensure personal loan apps do not have access to sensitive data. Under the new norms, they will be prohibited from accessing contacts, photos, external storage, location, and videos.
Apps must submit the necessary documents
If a loan app has an RBI license to give personal loans, it has to submit a copy of the license for review by Google. Meanwhile, if the app is simply facilitating lending by a non-banking financial company (NBFC) or a bank, it must show that in the declaration. The declaration must also contain the names of "registered NBFCs and banks."
