Some lending apps thrive on India’s Google Play despite policy violations

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At least ten Indian lending apps on Google’s Play Store, which have been downloaded tens of thousands of times, breached Google guidelines on loan repayment spans aimed at protecting vulnerable borrowers, according to a Reuters overview of such solutions and much more than a dozen consumers.

Four apps were taken down in the Play Store – where the vast majority of Indians download mobile apps – after the news agency Reuters flagged to Google that they were breaking up its ban on offering personal loans requiring full repayment in 60 days or less.

Three of those apps – 10MinuteLoan, Ex-Money and Extra Mudra – didn’t return calls and emails seeking comment.

The fourth app, StuCred, has been allowed back to the Google Play store on Jan. 7 when it removed the offer of a 30-day loan. It denied participating in any untrue practices.

At least six other apps remain available in the shop that offer loan repayment spans, or tenures, some as low as seven days, according to 15 borrowers and screenshots of loan particulars from all six apps shared with journalists at our partner agency, Reuters.

A number of these apps apply exorbitant processing fees, as high as 2,000 rupees (approximately $27) on loans of less than 10,000 rupees with tenures of 30 days or below, according to the 15 borrowers. Together with different charges including one-off registration costs, borrowers can cover, in real terms, interest rates as large as 60% each week, their loan details reveal.

In contrast, Indian banks typically offer personal loans with annual interest rates of 10-20%, and they usually do not have to be repaid in full for at least a year.

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The Reserve Bank of India (RBI), the banking regulator, didn’t respond to a request for comment about whether it intended to step up supervisory action. In December it issued a public opinion regarding lending apps, warning some participated in “unscrupulous activities”, such as charging excessive rates of interest and fees.

Google, which dominates India’s app market with over 98% of smartphones using its Android platform, said its policies were “continuously updated in response to new and emerging threats and bad actors”.

“We take action on apps that are flagged to us by users and regulatory bodies,” it added.

Once contacted by journalists at our partner news agency Reuters, the apps that offer short tenures either refused wrongdoing or did not respond.

The apps, a lot of which act as intermediaries linking borrowers and lending institutions, aren’t breaking the law since the RBI has no guidelines covering minimum loan tenures. The RBI also doesn’t oversee intermediaries.

The Indian finance ministry and information technology ministry did not respond to requests for comments on if they planned to increase evaluation of these apps.

Some customer campaigners say short-term, or payday, loans can cause borrowers defaulting and running up spiralling costs.

Google introduced its own global policy because of its stage in 2019″to protect users from harmful or deceitful practices”.

The growth of smartphones and affordable mobile internet in India has witnessed a proliferation of countless personal lending apps in the past couple of years. Campaign groups say accelerated advances in technology have outpaced authorities and are calling for regulations to be introduced regarding loan tenures and penalties.

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‘UNILATERALLY DECIDED’

The four apps found to have breached Google’s repayment length policy – 10MinuteLoan, Ex-Money, StuCred and Extra Mudra – were advertisements loan tenures of 30 days in their apps and was downloaded a total of at least 1.5 million occasions.

Reuters flagged the apps to Google on Dec. 18 and they had been removed in the Play Store in India within four days.

In reaction to a question about if it’d offered loans that required full repayment in 60 days or less, StuCred stated, “Google has unilaterally decided that fintech apps cannot be on their apps store which have repayments under 30 days, even though no law relating to the same has been passed that would require such action on their (Google’s) part.”

Several different apps say on their Play Store listings the minimum repayment length they provide is over three months, but in fact their tenures frequently range between seven and 15 days, based on the 15 borrowers and their screenshots.

Those apps include CashBean, Moneed, iCredit, CashKey, RupeeFly and RupeePlus, which are downloaded a total of nearly 12 million times.

Moneed said it stuck to RBI principles and that any firm that did not do so shouldn’t be allowed to conduct business. In response to a question about whether it had provided loans that required full repayment in 60 days or less, it stated, “We support 90 days repayment for the loan cycle.”

CashBean also said that it accompanied with RBI guidelines. It didn’t directly address a question on if it offered loan tenures of 60 days or not.

CashKey, iCredit, RupeeFly and RupeePlus didn’t respond to emails seeking comment and were not accessible by telephone.

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HARASSMENT INVESTIGATIONS

The lending app industry has separately attracted the scrutiny of police who say they’re exploring dozens of apps after the suicides of two borrowers in the past month after their families were allegedly plagued by debt-recovery agents.

The police have not revealed the identities of those under evaluation.

Debt-recovery harassment is illegal under RBI rules which say collection agents cannot harass borrowers by “persistently bothering” themby contacting their family or acquaintances.

The Reuters overview of 50 popular lending apps on Google Play discovered that nearly all them require debtors to give them permission to get their phone contacts.

Mahesh Dommati, a 28-year-old tech employee in Hyderabad who lost his job through the COVID-19 lockdown, was unable to settle the 6,000 rupee loan he had removed of the app called Slice. He explained retrieval agents used his contact listing to repeatedly call his family and friends, demanding they pay on his or her behalf.

Slice stated it abided by RBI rules and failed to engage in harassment.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Nupur Anand. Additional reporting by Jatindra Dash and Sudarshan Varadhan. Editing by Euan Rocha and Pravin Char.

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