Digital Monsters
While technology has made the process smoother, it's opened up another Pandora's box altogether. Money lending apps are harassing customers to the point of suicide.
The headlines that shocked Indians recently read something like this...
“A young MBA from Andhra Pradesh committed suicide on the inability to repay a loan of Rs.25,000 availed from a Digital Lending app.”
“A 28-year-old dies by suicide under pressure from online harassment by Digital money lenders.”
The painful question is - What went wrong?
Technology has made internet and smartphones accessible to billions of people.
But, everything comes at a cost, even the easy and free appearing technology.
Digital money lending apps are no exception.
The RBI, for the second time in six months, has cautioned the general public about the unauthorized money lending happening through digital apps.
Digital money lending apps are an easy source of money in such challenging times. After all, it's just a click away!
Why not take it from a bank?
Simple. The tedious process. Borrowing from a bank or an NBFC can be super slow. It may take several days for the transfer to reflect in your account. But these lending apps save all the trouble.
By providing a scanned passport-sized photo, bank statement, Aadhar card, and Pan card details, instant loans can be availed (the requirements may vary with different apps, but more or less remains the same). The amount that can be borrowed may vary from a few thousand to as much as Rs. 50 lakhs!
The modus operandi is to lure the customer with promises of instant loan and offers. Once the customer gets on board, these apps charge exorbitant interest rates, taxes and hidden charges. The terms and condition clauses run in several pages(who even reads them?) By the time one decides to pay up, the amount is close to 2X or even more!
Now, if the customer fails to repay in a stipulated period, a high level of online and social harassment is unleashed.
How?
Permission to access your contacts, social media, and even your phone gallery is given to the app when you download them.
A team of tele-callers is then arranged to harass the customers, their friends and family. Also, a very abusive and high handed method is used for recoveries. In many cases, fake legal notices are dispatched to intimidate the customer.
The addresses and email ids provided by many companies are also entirely false in many cases. There is a strong suspicion that these may be shell companies (no business operations, mostly created to avoid taxes) laundering money on a large scale. It is also believed to be an ecosystem wherein customer data is shared amongst many apps. This ensures that the customer never comes out of the debt trap.
A high number of suicide cases and cyber frauds alerted many state governments that have now written to Google to remove these apps from their play store.
Cash Mama, Monkey Cash, Dhana Dhan loan, Hey fish, Loan Cloud, Loan Bro, RoboCash, Loan Gram, Super Cash, Mint Cash, Cash Port, Kissht, rePay loan, OCash, Cashmap, Mastermelon Cash train, Water Elephant, Udhaar loan, Snapit, Rupeego.
The list goes on and on.
Many of the above-mentioned apps have been removed. But a lot many remain.
DALAI (Digital Lenders Association of India) established in 2016, has strongly condemned such malpractices and issued guidelines on how to identify fraudster money lending apps.
The RBI has fiercely come out and mandated digital platforms linked to NBFCs and Banks to adhere to fair practices and has opened a portal for related complaints.
The RBI’s "Savdhaan Rahiye, Satark Rahiye" is as important a warning as it gets. Besides this, the RBI has been issuing regular circulars and requesting the public not to share personal details, KYCs and exercise caution when dealing with such apps.
The time is for the public to be more vigilant.
Team ReadOn requests its readers to inform their near and dear of the scam happening in the name of lending and easy money prospects.
The Loan Sharks are out and after us!
Financial literacy is still a long road in our country but a little caution can save a lot of trouble.
Stay safe, take care.
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By Yavantika, Divya and Ashita