Instant Loan Apps Are A Nightmare And People Are Falling For It Especially In This Pandemic

Do you want everyone on your contact list, including family, friends, colleagues, and more, to get phone calls and WhatsApp messages from random numbers asking them to remind you that you have not paid up a loan that you had recently taken? If your answer is no, then here is an advice - do not take a loan from that random app you found online.

The full extend of the reach of these obscure, unregulated apps in India is yet to be identified and the authorities are only started probing them.

Reuters

The probe which began in Telangana has since spread to other states like Tamil Nadu, Karnataka, and Kerala where similar cases have been filed.

In Telangana alone, police have filed at least 50 cases in this connection and arrested 29 people, including three Chinese nationals, till now.

The cases were registered after at least five people, including a software engineer reportedly ended their lives following harassment by the loan providers to pay it back.

These app-based loan providers who do not have any registration or fall under the RBI regulations target employed people or students with short-term loans, which often have a high-interest rate.

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Since it is instant approval, without any paperwork or other usual formalities, people who are in urgent need of cash will fall for it.

The loaned amount is credited to the applicant's account after deduction of a 'processing fees'.

Trouble starts when borrowers fail to pay back on time

The trouble starts when the borrower fails to pay back the loan on time. It starts with reminder calls, which can be gentle to rude depending on the amount.

If the borrower still fails to pay the amount, the tone of the calls changes to abuse and harassment.

BCCL

And these calls will not just be limited to the borrower. Since they already have access to the phonebook and call history through the permissions granted to the app while installing, they can use it to identify those close to the borrower and start calling them with threatening messages.

Chennai saw four persons get arrested

In Chennai, where four people were arrested by the police in connection with the case for supplying over 1,000 sim cards to the loan apps.

The investigations revealed that the sim cards used by the accused were procured fraudulently by the directors of a city-based digital firm with the help of two people, including the Territory Sales Manager of a mobile service provider.

They procured 1,100 sim cards and the required standard procedure involved in the issuance of sim cards were not followed.

The mobile numbers, used as part of the loan app operations, were used to "intimidate and abuse" the person who was unable to repay as well as his mobile phone contacts.

Reuters

Even Kerala fell prey

In Kerala, the Hi-Tech Cell of the police said they have come across several cases where people who have taken loans and their families have been on the receiving end of a barrage of abuses and harassment due to these loans.

According to some of the victims, their loan amount had doubled and tripled in a matter of weeks and they were forced to take another loan from another app to pay the first loan, thus ending up in a trap of debt.

As the investigation across states continues the police are engaging experts for data analysis for studying the voluminous data as a preliminary investigation into the financial transactions of the online loan app firms revealed 1.4 crore transactions worth nearly Rs 21,000 crore.