Google is facing the heat from RBI and the Central government to put more stringent checks to curb illegal digital lending apps in India.
According to a new Reuters report, the US tech giant has been called several times by the RBI and the Central government and asked to introduce stricter checks to curb the illegal lending apps in India.
Google said that it had revised its policy on lending apps, and since September 2021 additional requirements are needed for the financial apps to be approved in the Play Store. Google recently removed more than 2,000 predatory loan apps in India stating policy violations.
While RBI requires any loan apps to be backed by regulated entities, enforcing the rule has been the duty of Google. As Google owns and operates the Google Play Store, it is the dominant app store in India, with more than 95% market share. Google has also been asked to look at ways to suppress the use of other forms of distribution of such apps like third-party websites and downloads.
Google is set to roll out a new advertisement policy for financial ads. Where it requires the advertisers to be verified firms to show the ads to users, reports Outlook India. As part of verification, advertisers must demonstrate that the relevant regulators license them.
RBI to make a whitelist of legal platforms
Most loan apps on the Play Store are not registered with RBI or affiliated with regulated entities or banks. They operate on themselves and provides loan at exorbitant rates of interest.
RBI will be preparing a whitelist of legal money lending apps that are allowed to operate in India. Ministry of Electronics and Information Technology (MeitY) will ensure that only these platforms are allowed to be hosted on the Play store and App store.
Predatory loan apps have been wrecking havoc in the country
Just last week, a couple committed suicide due to harassment from such predatory loan apps. We have seen news like these every other week and it's so sad that people have been falling for such apps and moving to hard decisions caused by harassment of these apps.
However, central agencies and local law enforcement take measures to curb these kinds of apps. Recently a gang of four was arrested in Vijayawada for operating two different loan apps. Chandigarh cyber cell recently busted a racket of 21 people headed by a Chinese national who operated many other predatory loan apps.
ED froze funds of various payment gateways such as Paytm, Cash free and Razorpay in connection with instant loan apps.
The introduction of the RBI whitelist for such apps might not be the only solution to curb these illegal loan apps. These apps could pop up even without using the Play store. Even if some apps are banned, they could come back in different names.
There needs to be awareness of unregulated loan apps among common people too. These apps leech on helpless people in dire financial situations who don't try to understand the consequences of these apps.
