Bengaluru: Unauthorized borrowing There is a problem that is troubling victims, creditors and authorities alike. Industry participants told TOI that promoting awareness and digital literacy emerged as the only solution in the immediate horizon along with continuous audit of the online app marketplace.
A recent survey conducted by Fintech Association for Consumer Empowerment (FACE) and Grant Thornton India identified unauthorized lenders as the biggest threat. Consumer confidence and industry consolidation.
74% of survey respondents, 54 of them – including banks, non-bank financial companies, investors, think tanks, and consumer associations – reported unauthorized lenders with a severity score of 6.1 on a scale of 7. Marked.
Demand for regulatory intervention was strong, as only 6% underestimated the risk. Although significant progress has been made in addressing this issue, the negative impact of unauthorized loan apps means that the market is ranking it as the highest risk.
“Two years ago, the problem was much more widespread. There was no proper management of how these apps were showing up on the App Store, thousands of apps. Today, the problem is being solved a lot, at least by Google. From Play Store’s point of view,” Saxena told TOI.
In 2023, Google signed a deal with FACE onboarding as the preferred flagship, to take on the Predators. Digital lending apps On Play Store in India. Since then, FACE has been supporting online search companies with market intelligence to enable detection and removal.
Saxena, however, agreed that regulating marketplaces is not a complete mechanism to address predatory practices in digital lending. “Marketplaces can be a source of such illegal lenders, but increasingly they communicate with users through direct messaging or by forcing them to download Android application packages of their apps separately,” he added. force.”
In August, Reserve Bank of India It proposes to create a public repository of digital lending apps deployed by its regulated entities as a measure to curb unauthorized lending and prevent consumers from falling victim.
The rise in unauthorized loans has piled up problems ranging from cyber-harassment and debt entrapment. Both the Google Play Store and the Apple App Store have proven to be useful platforms for such app developers to get exposure. Some of these exchanges between perpetrators and victims have led to suicides in the past year and in the current one.
Babu Lal, a software engineer by profession, has emerged as a common thread for many people who have fallen into debt over the years and become victims of fake loan scams initiated by these apps. “Some of these apps have just been released and appear on the top trending lists under the lending category in less than 24-48 hours. If you do a simple search on the name of the app developer, you App marketplaces like the Google Play Store and the Apple App Store have a lot to do with not allowing such parties. Apple certainly has a lot of catching up to do here There is scope,” he told TOI.
Lal opined that fintechs do not fully realize that such apps harm their legitimate businesses and consumers. “These fake apps are ripping off their users.”
Even as awareness of fintech prevails, startups haven’t been able to do much to curb the problem, with players looking for a home from regulators. Sashank Rashyasaranga, co-founder axio (formerly Capital Float) told TOI that pursuing risk-driven lending not only protects consumers but also maintains systemic stability.
“Regulation in lending ensures that fair practices are strictly followed and consumers are not given excessive advantage,” Rishyasaranga added.