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Data Privacy Practices and Policies for Digital Credit Services

Financial Inclusion India

Customer making payment using credit card at groceries or Kirana shop | Photo Credit: Adobe Stock


Digital credit has grown rapidly across a diverse range of low- and middle-income countries (LMICs) over the past decade, but there is a limited understanding of the terms and conditions for such loans, particularly as it relates to data privacy for users. Loan providers typically utilize applications that collect users’ general and personal data for credit scoring. However, borrowers are often unaware or do not provide informed consent to the collection and use of this sensitive data which is sometimes used to engage in coercive repayment tactics for those who fail to repay loans on time.

Despite widespread interest in data privacy and mounting evidence that many new digital lenders unethically collect or use borrowers’ data, relatively little is known about privacy-related risks associated with using digital credit services in LMICs.

Study Design

This study, taking place in both India and Nigeria, will utilize a combination of desk review, surveys, and in-depth interviews (IDIs) with key stakeholders to uncover contextual definition of digital data privacy among all relevant stakeholders, as well as the expectations, perceptions, and experiences of credit users in both countries. In particular, the researchers will address three primary research questions, focusing on stakeholders in Nigeria and India:

  1. What is the contextual definition of data privacy among digital credit stakeholders?
  2. What are the perceptions, experiences and expectations of digital credit borrowers about data privacy in the study area?
  3. Are there provisions for data privacy protection in the study area, and how it impacts the well-being of borrowers?

After an initial desk review to examine the existing legal framework for digital data privacy protection in both countries of interest the project will feature surveys undertaken to measure borrowers’ perception of data privacy infringement and subjective and financial well-being with standardized scales. Secondary data will also be used to examine the availability and effectiveness of data privacy protection systems. In India, 1050 participants will be surveyed in India across the National Capital, Far West, and Central Regions, with participants randomly selected in each region. In Nigeria, 1020 participants will be surveyed in Nigeria across  Lagos, Oyo, and Ogun states.

In addition to the surveying component of the study, researchers will conduct in-depth interviews (IDIs) with a subset of digital credit users, as well as key staff of digital credit providers and relevant regulators. This is intended to deepen the understanding of contextual issues in digital data privacy. The study aims to complete 480 IDIs with users, as well 69 IDIs with the staff of credit providers and regulators, across India and Nigeria.

Results & Policy Lessons

Results from this project are forthcoming.

  • Saroj Koul
  • Rakesh Verma
  • Oluwabunmi Falebita
  • Oluwafemi Famakinde

2023 — 2024

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