Cracking down on a flurry of apps selling personal loans in a deceiving manner on Play Store, Google has brought a stringent policy for such apps to create a safeguard for susceptible customers.
It means the apps, which lure customers with low-interest rate loans and eventually defraud them with tricky terms & conditions and charging an inflated interest rate, will have to think again.
According to new Google Play developer policies, the firm has revised terms and conditions under which these predatory loan apps operate. For instance, a personal loans provider can lend money from one individual, organization, or entity to an individual consumer on a nonrecurring basis. These loans cannot be used for financing the purchase of a fixed asset or for education.
Further, they also have to provide information about the quality, features, fees, risks, and benefits of their loan products to enable the customer to make an informed decision about whether to undertake the loan.
According to an email/notification sent by Google to all fintech companies, it has given 30 days to comply with the new policy.
The move would impact many companies globally who have been minting hefty interest on short term loan products. Over the past 12 months, many Chinese companies flocked to India to make a quick buck through these personal loans.
Besides Chinese and US-based firms such as Cashbean, Gorupee, Moneed, Cashmama, Branch and Tala, several local companies have been offering short term loans. They charge interest rates as high as 35%, which includes service and processing fees. Such businesses provide loans with payback durations up to four weeks. The firms mentioned above would eventually be struck after this update of policies from Google in India.
Under personal loans, the loan provider is allowed to offer payday loans, peer-to-peer loans, title loans but not mortgages, car loans, student loans, revolving lines of credit (such as credit cards, personal lines of credit).
The policy mainly applies to apps that directly offer loans, are lead generators, and the ones who work with third-party lenders.
Additionally, the developers working on personal loan apps must disclose the essential information such as minimum and maximum period for repayment, maximum annual percentage rate (APR) and a representative example of the total cost of the loan, including all applicable fees in the app metadata.
Google will also strike down on short term personal loan apps, which require a full repayment in 60 days or less from the date the loan was disbursed. These short-term loans make it easy to impose hefty penalties and fees.
The update from Google will certainly wipe out the businesses of overseas players who have been eyeing to make quick money by offering short term personal loan. Sooner than later, such firms are also expected to hit by regulations in India as well.
Since Google is banning such apps, they will eventually look elsewhere to enable users to download their app. The most widely used method is direct downloads of the .apk files from their website or they can rope-in third-party app stores such as Samsung Galaxy Apps, Opera’s App Store and in-app download links through social media apps such as TikTok and Like.
Some apps form partnerships with OEMs such as Oppo, Vivo, Xiaomi who push to have these applications pre-installed on their devices, but these deals usually come with a substantial cost.
