There has been an increase in the cyber fraud cases via the illegal digital borrowing apps. In fact, the total number of complaints that were filed against these digital lending applications has doubled to 1,062 in the financial year 2023.
In October, to help secure people from such online scams and develop a dependable digital environment where they may use the internet without ending up being prey to such scams, Google has onboarded the Fintech Association for Consumer Empowerment as one of their high-priority flaggers. With this, the FACE will not be supporting Google with market intelligence to be able to detect the predatory digital lending applications in India that are non-compliant with the policies of Play Store and enable quick actions against them.
“Google has taken commendable steps in this space and established a stringent policy framework to prevent bad actors (predatory digital lending apps),” said the Chief Executive Officer of FACE Sugandh Saxena.
“This collaboration aims to strengthen user protection, emphasizing the importance of responsibility and ethics among stakeholders to drive positive change,” the COO of Balancehero India, Souparno Bagchi, further added.
The digital borrowing industry met a need that had been left unaddressed by the typical financial system in India. However, this digital lending space was plagued with multiple teething problems. One of which was the increase in fraud lending apps. This had hurt the concept of digital lending platforms in the borrowers’ eyes.
“The need for strict industry standards arose when a number of digital lending players, especially those outside India, resorted to questionable practices and collections were brought to the forefront,” said Anil Pinapala, the Chief Executive Officer and founder of FlexPay by Vivifi, a popular non-banking financial company. He further added that they did not provide any proper disclosure to the customer regarding the cost of credit and the other loan agreement terms.
But, thanks to the policies that are put down for digital lending, there exists a standardization of the disclosures, and the customers properly know the price of borrowing. “We have a regulator who is forward-thinking and forward-looking and has provided a framework for the digital lending industry to build a sustainable growth path,” Pinapala had said.