Google Is Urged To Proactively Examine Illegal Loaning Apps In India That Unsettle Society

Google is asked to actively look at illegal loans in India. (photo: pixabay)

JAKARTA – Not only in Indonesia, illegal online loan applications have also taken many victims in India. This came to the attention of the Indian government which asked Google to glare at illegal lenders who install apps on the Play Store and advertise on their platform.

Alphabet Inc's Google has been asked by the Indian government and the country's central bank to introduce tougher checks to help curb the use of illegal digital lending apps in India.

Although Google is not under the control of the Reserve Bank of India (RBI), the US tech giant has been summoned several times in recent months to meet with India's central bank and government. They are urged to introduce stricter checks and balances, which could help weed out illegal online loan applications.

Indian regulators have also asked lenders to step up checks on illegal loan applications, which have become popular during the pandemic. Regulators seek to control the proliferation of such applications that engage in immoral activities such as charging excessive interest rates and fees or in recovery practices that are not authorized by the central bank or violate money laundering and other government guidelines.

Google said last year it revised its Play Store developer program policies for financial services apps, including additional requirements for personal loan applications in India effective September 2021.

"We have removed more than 2,000 personal loan applications targeting India from the Play Store for violating Play policy terms," ​​a Google spokesperson said. They added that the step is taken if the policy is violated.

"We will continue to engage with law enforcement agencies and industry bodies to help address this issue," the spokesperson added.

While India's central bank requires that any loan application listed on the app store be backed by a regulated entity, it is up to Google to enforce this and monitor compliance.

Google has also been asked to review and limit the appearance of such applications through other distribution channels such as websites and other means of download. Google is also beginning to act on complaints it receives from industry bodies.

"Previously Google would not respond to complaints on individual apps. Now they are more proactive and look into them when complaints are reported to them," said one of four industry sources directly involved in the matter and who has been briefed on discussions with Google.

The Government of India and RBI are currently in the process of preparing a whitelist of approved loan applications. The central bank has also set norms to ensure that borrowers have to deal directly with the bank for loans and recoveries which can help keep third-party recovery agents away.

Google dominates the Indian app market with 95% of smartphones using its Android platform.

India's digital lending market has grown rapidly and facilitated US$2.2 billion in digital loans by 2021-22. It is not clear how many of those lenders through the application are involved in illegal practices.

These lenders often reach customers through advertising on platforms like Facebook and Google. Starting next month, Google will roll out a new advertising policy for financial services in India.

The policy says that in order to show financial services ads in India, advertisers must be verified in that country. As part of the verification, advertisers must demonstrate that they are licensed by the relevant financial services regulator, the blog said.