The Indian government and central bank have requested Alphabet Inc’s Google to implement more stringent checks to help prevent the use of unlawful digital lending apps in India.
Despite the fact that Google does not fall under the scope of the Reserve Bank of India (RBI), Google has been summoned several times in recent months to meetings by the central bank and the Indian government and urged to implement tougher checks and balances that can aid in the weeding out of such apps, according to four sources.
Indian regulators have already directed lenders to tighten their controls over unlawful loan apps that grew in popularity during the pandemic. Regulators are attempting to limit the proliferation of such apps that participate in unethical acts such as charging excessive interest rates and fees or engaging in recovery techniques that are not authorized by the central bank or violating money laundering and other government guidelines.
Google announced last year that it had amended its Play Store developer program policy for financial services apps, including the addition of extra restrictions for personal loan apps in India beginning in September 2021.
A Google official stated in a statement that they had deleted over 2,000 personal loan apps targeting India from the Play Store for violating the Play policy requirements. They will continue to engage with law enforcement and industry associations to address this issue.
While India’s central bank requires that any lending apps listed on app stores be backed by regulated entities, it is up to Google to enforce this and monitor compliance.
Google has also been asked to look at curtailing the rise of such apps via other distribution channels such as websites and other means of downloads, according to another industry source who is directly involved.
Google is also starting to act on complaints received from industry bodies.
Google previously stated that it would not respond to complaints about specific apps. They are now more proactive and do investigate when a complaint is brought to their attention.
The government and the RBI are currently putting together a white list of authorized lending applications. The central bank has also established regulations that require borrowers to deal directly with a bank for loan and recovery, which can assist to keep third-party recovery agents.
Google leads the Indian app industry, with its Android platform powering 95 percent of smartphones.
New advertising policy
In 2021-22, India’s digital lending market is expected to facilitate $2.2 billion in digital loans. It is unclear how much of that is due to apps engaged in illegal activities. These lenders frequently reach out to customers through adverts on platforms such as Facebook and Google.
According to a blog post on Google’s website, the company will begin implementing a new advertising strategy for financial services in India next month.
According to the guideline, advertisers must be authenticated in India in order to display financial services advertisements. According to the blog, advertisers must establish that they are licensed by the relevant financial services regulator as part of the verification process.