Google has taken strict action against over 3,500 digital lending apps listed on its India app marketplace for violating Play Store guidelines. The crackdown came after Google reviewed the erring apps, with some being taken down from the app marketplace.
The US-based company has stated that it has prevented the listing of over 14.3 lakh policy-violating apps and banned 1.73 lakh ‘bad accounts’ in India. In addition, Google has also claimed to have prevented more than $2 Bn worth of fraudulent and abusive transactions in 2022.
Google’s recent action comes amidst growing pressure from the union government and RBI to curb the usage of illegal lending platforms on Play Store. There have been increasing reports of multiple incidents involving death by suicide after harassment from loan operators. Women have also borne the brunt of sexual harassment from collection agents.
There have also been concerns over such apps’ security, safety, and privacy, with such illegal platforms also coming under regulatory scanner for charging exorbitant rates of interest and without any enforcement purview.
To address these concerns, Google has revamped its Play Store policies and issued a slew of norms prohibiting lending apps from accessing users’ contacts, photos, call logs, videos, location and other personal data post May 31, 2023.
The new norms require digital lending platforms to comply with more stringent guidelines for approval to list on Play Store. They also bring cryptocurrencies under the definition of financial products, while also mandating the furnishing of RBI license by those platforms that provide personal loans online.
Digital lending is a huge market, with 1.8 Cr disbursals worth INR 18,537 Cr in Q3 FY23, up 147% and 118%, respectively, over the corresponding period last year. The growth has primarily been led by emerging lendingtech startups, which have spurred the space with new offerings and smaller ticket sizes.
However, the recent actions by Google and other enforcement agencies indicate that illegal lending platforms will no longer be able to operate with impunity.