Industry thumbs up for Google’s stringent personal loan policy for apps

Google has enforced stricter regulations for digital lending apps, prohibiting access to users' contacts, photos, videos, call logs, external storage and precise location, which have just come into effect. This policy revision comes as a response to the growing number of unethical recovery practices employed by certain digital lending apps.

The circular also mentioned that entities that are not directly involved in money lending operations but rather serve as platforms facilitating lending by registered non-banking financial companies (NBFCs) or banks to users must clearly state this in the declaration. Moreover, the names of all registered NBFCs and banks should be prominently disclosed in the description of the app.

In 2022, Google took proactive measures to ensure the integrity of its Play Store platform. With a vigilant eye, it carefully reviewed over 3,500 personal loan apps operating within the country. Any violations found regarding the policy requirements led to swift and necessary enforcement action, including the removal of these apps. Google's

dedication to maintaining a secure and user-friendly environment persisted as they continually refined their policies and enhanced their review processes.

Bizz Buzz interacted with a number of stakeholders to understand its impact.

Nageen Kommu, founder & CEO of Digitap says, “The stricter guidelines may lead lending service providers to pursue NBFC licenses, increasing compliance costs.”

He further noted a potential trend where established fintech companies explore acquiring NBFCs to streamline compliance processes and continue providing services seamlessly on the Google Play Store.

Digitap's priority will be to ensure compliance with the new guidelines while prioritizing a seamless user experience. Furthermore, we will closely monitor industry trends and actively seek strategic

partnerships or initiatives to assist digital lenders in managing compliance costs and overcoming operational challenges, he said.

Rohit Shrivastava, Head Compliance and Regulatory Affairs, Balancehero India, says, "This rule will set higher standards for transparency, user protection, and responsible lending practices, fundamentally

reshaping the industry's landscape. While some digital lenders may need to make adjustments, it also presents an opportunity for those committed to responsible operations and customer-centricity.”

Fintech companies offering financial services alongside lending may face notable challenges in complying with the more stringent guidelines. Industry leaders recognize that regulatory and policy

changes pave the way for sustainable growth for responsible players. As a result, they are closely monitoring industry trends, seeking strategic partnerships, and exploring initiatives to assist digital lenders in managing compliance costs and overcoming operational challenges.

Quite apparently, Google Play Store's stricter regulations for digital lending apps are bound to stimulate innovation and foster healthy competition among lenders. This shift ultimately aims to benefit millions of users in their search for reliable and equitable lending solutions.

As the industry adjusts to these transformative changes, all eyes are on the digital lending ecosystem, which must adapt to the evolving landscape, prioritize compliance, and maintain a seamless user experience.