Google rolls out stricter loan app norms, players fear short-term disruptions

Digital lending players and fintech associations have welcomed the tougher standards Google has published for apps on its Play Store, even as they worry about higher customer acquisition costs in the near term.

Google has introduced a new policy for personal loans, whereby all players listed on its store must either provide their lending authorization as provided by the RBI, or provide details of their lending agreement if the third-party fintech is in partnership with another lender.

“The new personal loan policy restricts digital lending apps from accessing customer storage, contacts, location history, phone numbers, photographs or videos; thus protecting borrower privacy and enhancing financial practices,” said Mahesh Shukla, CEO and founder of digital lender PayMe. “This move will create a more level playing field for digital lenders who operate with transparency and integrity,” he added.

Players were also asked to disclose information such as minimum and maximum payment terms, interest rates, and other fees.

Based on RBI standards

The policy, which is being rolled out from Wednesday, is based on the digital lending framework outlined by the Reserve Bank of India (RBI) and comes after the government and regulator asked Google to help introduce more stringent checks to curb the use of illegal lending apps. Google has been making changes and adjustments to the digital lending policy since September 2022.

Sugandh Saxena, CEO of FACE (Fintech Association for Consumer Empowerment) said: “Our work monitoring hundreds of questionable lending apps tells us that illegal and fraudulent apps were taking such access because their business model relies on exploiting customers using private contacts and photos. them”. .

The expectation is that enforcement of the new rules will discourage such illegal applications, she said, adding that FACE will nonetheless continue to monitor such activity and be vigilant as frauds may evolve in one form or another despite the strict guarding of the gate.

The impact of financial technology

Industry players said the new guidelines depend entirely on Google, whose authority will check whether each player has the required licenses and documentation. They added that the idea is to organize the space to ensure that only verified and legitimate businesses survive, but that it will lead to some short-term operational disruptions such as with regards to tracking customer groups and syndications.

“This can affect NPAs because now we don’t have more information about customers before granting loans. They also can’t upload Aadhar images and we will have to do Aadhar live verification. The business cost,” said Ajay Chaurasia, Vice President – Marketing, Product and Business at RupeeRedee. It’s going to increase in terms of acquisition and conversion, not compliance.

While a lack of data would certainly be an issue, he said the guidelines would provide more clarity as to which areas digital lenders can operate in and ensure only serious players remain, adding that the process of uploading and approval of the required documentation took only about two days for the company.