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Illegal loan apps: After RBI decides to prepare a whitelist, India puts pressure on Google to take action

Vivek Mishra
Vivek MishraSep 20, 2022 | 12:47

Illegal loan apps: After RBI decides to prepare a whitelist, India puts pressure on Google to take action

Google had removed as many as 2,000 loan apps from India Play Store from January to June this year for violating company's policies. (Reuters Photo)

Days after the Enforcement Directorate (ED) raided locations in Bengaluru in the Chinese loan apps case, the Indian government has put pressure on Google to help curb illegal lending apps.

Google has been asked by the Indian government and the Reserve Bank of India (RBI) to introduce more stringent checks to help curb the use of illegal digital lending applications in the country, reported Reuters.

Google had removed as many as 2,000 loan apps from India Play Store from January to June this year for violating company's policies.

Illegal loan apps: These illegal loan apps, mostly Chinese, became popular during the Covid pandemic. As people were losing their jobs and facing severe losses in businesses, these apps provided loans that were easily available and without much documentation.

Many people who took out loans from these apps ended up paying more than what they borrowed. (India Today illustration by Siddhant Jumde)

There were allegations that many of these apps were involved in money laundering also.

Problem with these apps: The problem was that these apps had no permission from the RBI and were charging excessive interest rates and fines and their recovery practices were also not authorised by the RBI. Many people who took out loans from these apps ended up paying more than what they borrowed.

The recovery process by these apps included online abuses and threats. Some of the victims of these loan apps ended their lives due to mental trauma. The collection agents even used to contact the family members and friends of the borrowers and threaten them also.

Google's response: Google said that last year it revised its Play Store developer program policy for financial services apps, including requiring additional requirements for personal loan apps in India effective September 2021, reported Reuters.

"We have removed over 2,000 personal loan apps targeting India from the Play Store for violation of the Play policy requirements. "We will continue to engage with law enforcement agencies and industry bodies to help address this issue" a Google spokesperson said.

What is the government doing? Finance Minister Nirmala Sitharaman on September 9 decided to take a host of measures to check the operations of such apps.

In a meeting it was decided that RBI will prepare a whitelist of all the legal apps and the Ministry of Electronics and Information Technology (MeitY) will ensure that only these are hosted on app stores, reported PTI.

Last updated: September 20, 2022 | 12:47
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