Google’s Head of Trust and Safety for Asia Pacific explains why it took time to rein in bad loan apps

While Mitra says they have a system in place where every app has to go through it and comply with Play Store rules, for approving loan apps, they went the extra mile to keep users free from scams and malware. “Earlier, it took an internet connection, a laptop or device, and $25. That’s all you needed because we didn’t really have policies in the country on who can and who cannot. But now, there has been a significant change. We worked with RBI and the regulators collaboratively over the last two years, and we’re really happy with where we are today,” he says.

According to new government rules, loan apps are now required to show their lending licence to be approved on Google Play Store, meaning they either have to be affiliated to a bank or NBFC which RBI licenses. Loan apps are still not licensed in India.

“If you want to put out a loan app, you have to first partner with somebody who is licensed by RBI. You have to convince them to update their website to include your app. We actually receive requests. The next step is to submit your app. There are a bunch of actual requirements, such as lending policies and a minimum duration for return. Alongside other technicalities, like whether you are giving permanent disclosure for access to data.”

“One of the biggest changes that Google has made is that we basically stated that if you are a loan app, you cannot have access to contacts, access to images and data on the device.” As of now, as Mitra clarifies, the Google Play Store has “200 loan apps that have been vetted, verified, and are partnered with an NBFC.” In 2022, Google reviewed and took enforcement action on over 3500 personal loan apps.

Mitra recommends users download apps only from the Play Store to be safe from poor-quality user experiences, scams, and malware. Sideloading apps is a method that allows you to install and use applications that you can’t find through the Google Play Store.

In recent years, as India became more digitally savvy, digital lending practices also picked up, creating a digital lending infrastructure. That’s when hundreds of loan apps – mostly illegal – started populating app stores, especially on Google’s Play Store. These apps feed off the desperation of users, mostly students and small shopkeepers from tier-2 and 3 cities of India, looking for short-term financial aid. However, the habit of taking loans from instant loan apps led to abuse, financial frauds, harassment, and, in some cases, suicides.

“You can always advertise a loan app as long as you’re advertising a legitimate app that’s in the Play store. I don’t think there is anything harmful or wrong in that,” Mitra says when asked if loan apps should be advertised on Google properties like Search. “No law says you cannot advertise loan apps.”