Some lending apps thrive on India's Google Play despite policy violations

At least 10 Indian lending apps on Google's Play Store, which have been downloaded millions of times, breached Google rules on loan repayment lengths aimed at protecting vulnerable borrowers, according to a Reuters review of such services and more than a dozen users.

Four apps were taken down from the Play Store - where the vast majority of Indians download phone apps - after Reuters flagged to Google that they were violating its ban on offering personal loans requiring full repayment in 60 days or less.

Three of these apps - 10MinuteLoan, Ex-Money and Extra Mudra - didn't return calls and emails seeking comment.

The fourth app, StuCred, was allowed back on the Google Play store on January 7 after it removed the offer of a 30-day loan. It denied engaging in any unscrupulous practices.

At least six other apps remain available at the store that offer loan repayment lengths, or tenures, some as low as seven days, according to 15 borrowers and screenshots of loan details from all six apps shared with Reuters.

Some of these apps apply steep processing fees, as high as 2,000 rupees ($27) on loans of less than 10,000 rupees with tenures of 30 days or under, according to the 15 borrowers. Together with other charges including one-off registration costs, borrowers can pay, in real terms, interest rates as high as 60% per week, their loan details show.

By comparison, Indian banks typically offer personal loans with annual interest rates of 10-20%, and they usually do not have to be repaid in full for at least a year.

The Reserve Bank of India (RBI), the banking regulator, did not respond to a request for comment about whether it planned to step up supervisory action. In December it issued a public notice about lending apps, warning some engaged in "unscrupulous activities", such as charging excessive interest rates and fees.

Google, which dominates India's app market with over 98% of smartphones using its Android platform, said its policies were "continuously updated in response to new and emerging threats and bad actors".

"We take action on apps that are flagged to us by users and regulatory bodies," it added.

When contacted by Reuters, the apps offering short tenures either denied wrongdoing or did not respond.

The apps, many of which act as intermediaries connecting borrowers and lending institutions, are not breaking the law as the RBI has no rules covering minimum loan tenures. The RBI also does not oversee intermediaries.

The Indian finance ministry and information technology ministry did not respond to requests for comments on whether they planned to increase scrutiny of these apps.

Some consumer campaigners say short-term, or payday, loans can lead to borrowers defaulting and running up spiralling costs.

"Predatory loan apps with high processing fees, short tenures and steep penalty charges on default are leading people into a debt trap," said Pravin Kalaiselvan, who heads a digital rights group, Save Them India Foundation.

Google introduced its own global policy for its platform in 2019 "to protect users from harmful or deceitful practices".

The rise of smartphones and affordable mobile internet in India has seen a proliferation of hundreds of personal lending apps in recent years. Campaign groups say rapid advances in technology have outpaced authorities and are calling for regulations to be introduced regarding loan tenures and fees.

"There are no clear norms on lending apps in India. Right now they fall in a grey zone," said Nikhil Pahwa, a digital rights activist and editor of MediaNama, a Delhi-based publication on technology policy.

'Unilaterally Decided'

The four apps found to have breached Google's repayment length policy - 10MinuteLoan, Ex-Money, StuCred and Extra Mudra - were advertising loan tenures of 30 days on their apps and had been downloaded a total of at least 1.5 million times.

Reuters flagged those apps to Google on Dec. 18 and they were taken down from the Play Store in India within four days.

In response to a Reuters query about whether it had offered loans that required full repayment in 60 days or less, StuCred said: "Google has unilaterally decided that fintech apps cannot be on their apps store which have repayments under 30 days, even though no law relating to the same has been passed that would require such action on their (Google's) part."

Several other apps say on their Play Store listings that the minimum repayment length they offer is over three months, but in reality their tenures often range between seven and 15 days, according to the 15 borrowers and their screenshots.

Those apps include CashBean, Moneed, iCredit, CashKey, RupeeFly and RupeePlus, which have been downloaded a total of nearly 12 million times.

Moneed said it adhered to RBI rules and that any company that did not do so should not be allowed to do business. In response to a Reuters query about whether it had offered loans that required full repayment in 60 days or less, it said: "We support 90 days repayment for the loan cycle."

CashBean also said it followed RBI guidelines. "Our customer-care lines are open for all our borrowers at all times," it added. It did not directly address a question on whether it offered loan tenures of 60 days or less.

CashKey, iCredit, RupeeFly and RupeePlus did not respond to emails seeking comment and were not reachable by phone.

Harassment Investigations

The lending app industry has separately attracted the scrutiny of police who say they are investigating dozens of apps following the suicides of at least two borrowers in the past month after they and their families were allegedly harassed by debt-recovery agents.

The police haven't disclosed the identities of the those under investigation.

Debt-recovery harassment is prohibited under RBI rules which say collection agents cannot harass borrowers by "persistently bothering" them, or by contacting their family or acquaintances.

The Reuters review of 50 popular lending apps available on Google Play found that nearly all of them require borrowers to give them permission to access their phone contacts.

Mahesh Dommati, a 28-year-old tech worker in Hyderabad who lost his job during the Covid-19 lockdown, was unable to repay the 6,000 rupee loan he had taken out from an app called Slice. He said recovery agents used his contact list to repeatedly call his family and friends, demanding they pay on his behalf.

Slice said it abided by RBI rules and did not engage in harassment.