The Google Play Store has updated its personal loan apps policy by specifically limiting apps that require repayment in full in 60 days or less from the date the loan is issued.
The new developer policy aims to limit mobile apps that encourage uncontrolled borrowing as concerns on lending malpractices grow.
Previously, Google Play Store had banned mobile apps that expose users to deceptive or harmful financial products and services.
With the financial services updated policy, the restrictions now stand as follows:
- Binary options – Restrict apps that provide users the ability to trade binary options
- Cryptocurrencies – Restrict apps that mine cryptocurrency on devices and only permit those that remote manage the mining of cryptocurrency
- Personal loans – Restrict short-term personal loan apps that promote loans with a repayment in full in 60 days or less from the date of loan issue.
The updated policy is especially restrictive within the United States where personal loans with an Annual Percentage Rate (APR) of 36% or higher are not allowed. These apps are now required to display their maximum APR, calculated consistently with the Truth in Lending Act (TILA).
The affected firms have been given 30 days to comply with the directive.
Speaking on the updated policy, Joshua Oigara, CEO, Kenya Commercial Bank (KCB), the largest bank in East Africa, said:
“The microloans focus on the small traders, for here and today. A daily customer does not want to be forced to endure a longer repayment period.”
Oigara said that most borrowers were opting for the option to repay the loan within a month despite the lender offering a range of mobile loans with repayment periods ranging from one month to a year.
The new policy update is no surprise to local Kenyan loan apps which have faced a major backlash from the industry, including the Central Bank of Kenya (CBK), due to their predatory practices.
Branch is one of the most popular mobile loan apps in KenyaThe Central Bank of Kenya has proposed an amendment to the Central Bank of Kenya Act which would bring these apps under the CBK and thereby under the 2016 interest rate cap.
The Digital Lenders Association of Kenya (DLAK) is in the process of self-regulating and lobbying for friendly regulation despite the CBK governor’s statement that the industry cannot self-regulate and instead needs to come under the law.
Despite this back and forth, it is clear that predatory lending poses a big risk to consumers and the industry and Google’s recent update is a move in the right direction.
Like our content? Please support our work by tipping us.
