Indian Govt In Talks With Google Play Store To Restrict Lending Apps From Accessing User Data

With an eye on curbing malpractices by digital lending apps, the Ministry of Electronics and Information Technology (MeitY) is reportedly in talks with Google Play Store to restrict lending apps from accessing user data.

Sources told Business Standard that some officials in the ministry are batting for sweeping restrictions on such apps, while others believe that the issues can only be tackled on a case-by-case basis.

MeitY is considering legal provisions to restrict the access of apps only to the data necessary for their operations, the report said. 

The officials at MeitY are also examining the rationale for which such apps require access to contact details, media and messages of the users. 

“Law enforcement agencies and other authorities concerned should approach Google Play Store to take down unregistered lending apps,” a source was quoted as saying. He added that illegal activities of these platforms are already covered under the Indian Penal Code (IPC) and as such these apps can only be taken down case by case.

This comes close on the heels of the Reserve Bank of India releasing its first set of guidelines for digital lending apps earlier this month. The framework urged the government to consider framing a law for banning unregulated lending activities.

The central bank also mandated that only regulated and registered entities will be allowed to operate and disburse loans. 

The report quoted MeitY officials as saying that the RBI’s guidelines have required mechanisms for compliance, adding that there is a need to ensure that digital loan apps produce their lending licence while being vetted by app stores.

As per a source, Google Play is currently reviewing legal aspects of the order.

“Any collection of data by digital lending apps (DLAs) should be need-based and with prior and explicit consent of the borrower…DLAs should desist from accessing mobile phone resources such as file and media, contact list, call logs, telephony functions, etc”, the RBI framework said.

This comes amidst a growing crackdown on unregulated digital lending apps. Many of these digital loan apps have been accused of charging exorbitant interest rates from customers and employing unethical recovery practices.

In one incident, a man from Mumbai died by suicide after getting repeated life threats over an online loan of INR 5,000 that he never took. In two separate incident, residents of Karnataka and Telangana died by suicide after being harassed by digital loan sharks.

Apart from this, a Mumbai-based woman and her kin were also sexually harrased for allegedly not paying a loan.

Earlier, the Institute of Chartered Accountants of India (ICAI) said that it was probing several chartered accountants (CAs) for helping unregulated Chinese lending apps set up business in the country. 

Finance Minister Nirmala Sitharaman also informed the Rajya Sabha this month that the government was taking action against dubious digital loan apps originating outside the country

RBI’s Sachet portal received more than 2,562 complaints against digital lending apps between January 2020 and March 2021. The central bank had also identified more than 600 unregistered lending apps on the Play Store last year.