Google To Restrict Loan Apps From Demanding Repayments Before 60 Days

The Developers of Google Play have issued a notice to all mobile lending apps using the play store to change repayment periods to not less than 60 days.

The Policy by google is supposed to bar any mobile app that demands loan repayments in full from borrowers within a period of 60 days or less from the day the loan is issued.

It is still not clear whether the new policy applies to loan apps globally or just in Kenya, but google wants the apps developers to comply and make necessary changes within 30 days.

Google says that its developers will have to collect data from all the mobile loan apps and ensure that they (loan apps) do not charge high interests on loans.

This rule will be a big blow to the mobile apps that operate in Kenya with the apps being so common amongst the android users.

Personal loan apps have been giving quick loans to individuals and have helped many Kenyans to secure loans faster.

As opposed to securing a bank loan, mobile loan apps just have to ask you a few questions and then review your loan history and within no time, you receive a notification of money sent to your mobile money service provider.

The loan is instant, yes, but the terms of repayment are so unfavorable with most of them seeking to have you repay them back within a month or even 21 days after issuance.

All loaners have penalties if you do not repay them back in due time but for the case of mobile money lenders, just loan repayment reminders and notifications will leave you “emaciated”.

Financial Services Deepening Kenya (FDS) released a report in August last year which showed that there are 49 digital credit providers in Kenya, with a new one being launched every year.

Most renown mobile loan apps in Kenya like Tala- charge 11 percent for 21 days and 15 per or 30 days, with Branch charging 15 percent per month, way above CBK’s requirement of 13 percent.

FDS and CBK confirmed that Kenyans have serious borrowing trends which have turned them into addicts with most of them being trapped into the loans’ ditch.

Most borrowers are always forced to get loans from other places to settle the pending ones which are digging a new hole to fill another hole. Some even end up selling properties.

The new google policy has really come in handy, especially because it will regulate the interest rates charged by these apps and at the same time increase the repayment period.