Loan apps stay on Google Store in India despite violations and deaths | Debt news


At least 10 Indian loan apps on Google’s Play Store, downloaded millions of times, violate Google’s rules on loan repayment terms to protect vulnerable borrowers, according to a Reuters review of such services and more than a dozen users.

The mobile lending industry has caught the attention of Indian police, who say they are investigating dozen of apps following the suicide of at least two borrowers last month after they and their families were allegedly harassed by debt collection agents.

The police did not provide any information about the identity of the persons identified.

Four apps were removed from the Play Store – where the vast majority of Indians download phone apps – after Reuters told Google that they were violating the U.S. tech giant’s ban on offering personal loans that are complete within 60 days or less must be repaid.

Three of these apps – 10MinuteLoan, Ex-Money, and Extra Mudra – didn’t return calls and emails asking for comments.

The fourth app, StuCred, was re-approved on the Google Play Store on Jan. 7 after removing the offer of a 30-day loan. It denied any unscrupulous practice.

According to 15 borrowers and screenshots of credit details from all six apps reported to Reuters, at least six other apps are still available in the store that offer a loan repayment term of just seven days.

Some of these apps charge high processing fees of up to 2,000 rupees ($ 27) for loans less than 10,000 rupees with a term of 30 days or less, according to the 15 borrowers. Along with other fees, including one-time registration costs, borrowers can pay real interest rates of up to 60 percent per week, as their loan details show.

In comparison, Indian banks typically offer personal loans with annual interest rates of 10-20 percent that typically do not have to be fully repaid for at least a year.

“Unscrupulous Activities”

The Reserve Bank of India (RBI) did not respond to a request for comment on whether it intended to step up supervisory measures. In December, she published a public notice about renting apps, warning some of them against “unscrupulous activities” such as charging excessive interest and fees.

Google, which dominates the Indian app market with more than 98 percent of the smartphones using its Android platform, said its guidelines “have been continuously updated in response to new and emerging threats and malicious actors”.

“We are taking action on apps presented to us by users and regulators,” she added.

When Reuters contacted them, the short-running apps either denied misconduct or did not respond.

The apps, many of which act as intermediaries between borrowers and credit institutions, do not break the law as the RBI has no rules for the minimum duration of loans. The RBI also does not supervise any intermediaries.

India’s Ministry of Finance and Information Technology did not respond to requests for comment on whether they intended to step up scrutiny of these apps.

Some consumer advocates say 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 penalties for late payments lead people into debt,” said Pravin Kalaselvan, head of a digital rights group, the Save Them India Foundation.

“Fraudulent Practices”

In 2019, Google introduced its own global policy for its platform “to protect users from harmful or fraudulent practices”.

The rise of smartphones and affordable mobile internet in India has resulted in the proliferation of hundreds of personal loan apps in recent years. Campaign groups say rapid advances in technology have overtaken the authorities and are calling for regulations to be put in place on loan terms and fees.

In 2019, Google introduced a global policy for its platform to protect users from harmful or fraudulent practices. [File: Sankalp Phartiyal/Reuters]

“In India there are no clear standards for renting apps. Right now they’re falling into a gray area, ”said Nikhil Pahwa, a digital rights activist and editor of MediaNama, a Delhi-based technology policy publication.

The four apps that were found to have violated Google’s payback period guidelines – 10MinuteLoan, Ex-Money, StuCred, and Extra Mudra – advertised 30-day credit periods on their apps and totaled at least 1.5 million Times downloaded.

Reuters reported these apps to Google on December 18, and they were removed from the Play Store in India within four days.

In response to a Reuters inquiry as to whether loans were offered that had to be repaid in full within 60 days or less, StuCred said: “Google has unilaterally decided that fintech apps cannot be available in its app store with repayments under 30 days although there is no law regarding the same, it has been passed that would require such action on their part [Google’s] Part.”

Loan terms on the test bench

Several other apps state on their Play Store listings that the minimum repayment period they offer is more than three months, but in reality, their maturities are often between seven and 15 days, according to the 15 borrowers and their screenshots.

These apps include CashBean, Moneed, iCredit, CashKey, RupeeFly, and RupeePlus, all of which have been downloaded nearly 12 million times.

Moneed said it complies with RBI rules and any company that doesn’t should be banned from doing business. When asked by Reuters whether they were offering loans that had to be repaid in full in 60 days or less, it said, “We support a 90-day repayment for the loan cycle.”

CashBean also said it followed RBI guidelines. “Our customer service lines are open to all of our borrowers at all times,” it continues. She didn’t go directly into the question of whether she offered credit periods of 60 days or less.

CashKey, iCredit, RupeeFly and RupeePlus did not respond to email requests for comments and were unavailable by phone.

Harassment in debt collection is prohibited under the RBI rules, which state that debt collection agencies must not harass borrowers by “harassing them continuously” or by contacting their families 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 rupee 6,000 loan he took out through an app called Slice. He said ambulance agents used his contact list to repeatedly call his family and friends asking them to pay on his behalf.

Slice said it followed RBI rules and did not engage in harassment.


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