According to sources, Google has been asked by Alphabet Inc. by the Indian government and central bank to implement stricter controls to curb the use of illegal digital lending applications in India.
Even though Google doesn’t fall under the remit of the Reserve Bank of India (RBI), the US tech giant has been summoned to meetings of the central bank and the Indian government multiple times in recent months, urging it to introduce stricter checks and balances that can be done, according to four sources at Sorting out such apps will help.
Indian regulators have already urged lenders to step up controls against illicit lending apps that have become popular during the pandemic. Regulators seek to control the proliferation of apps that engage in unscrupulous activities such as charging excessive interest rates and fees, engaging in collection practices not approved by the central bank, or violating money laundering and other government policies.
Google said it revised its Play Store developer program policy for financial services apps last year, including requiring additional requirements for personal loan apps in India from September 2021.
“We have removed over 2,000 personal loan apps targeting India from the Play Store for violating Play policy requirements,” said a Google spokesperson, adding that such steps are taken when the guidelines are violated.
“We will continue to work with law enforcement and industry groups to address this issue,” the spokesman added.
While the Central Bank of India requires all credit apps listed in app stores to be supported by regulated bodies, it’s up to Google to enforce this and monitor compliance.
According to another industry source directly involved, Google has also been asked to curb the rise of such apps through other distribution channels such as websites and other download channels.
Google is also beginning to respond to complaints from industry bodies.
“Previously, Google didn’t respond to complaints about individual apps. Now they are more proactive and follow up when a complaint is reported to them,” said one of the four industry sources directly involved in the matter, who was briefed on the discussions with Google.
The government and RBI are in the process of creating a white list of approved loan applications. The central bank has also set standards to ensure that a borrower must go directly to a bank to originate and collect loans, which can help keep third-party collection agencies away.
Google dominates India’s app market with 95% of smartphones using its Android platform.
The Department of Electronics and Information Technology and RBI did not immediately respond to an email request for comment.
India’s digital lending market has been growing rapidly, facilitating $2.2 billion in digital lending in 2021-22. It’s not clear how much of this is through apps that engage in illegal practices.
These lenders often reach customers through ads on platforms like Facebook and Google.
Starting next month, Google will introduce a new advertising policy for financial services in India, according to a blog post on its website.
The policy states that in order for financial services ads to run in India, advertisers must be verified in the country. As part of the verification, advertisers must demonstrate they are licensed with the relevant financial services regulator, the blog says.