Taming the digital loan sharks – The New Indian Express

No matter what you do, loan sharks refuse to leave. They come back in different guises, sometimes better equipped with technology and finding smarter ways to bend the rules. The emergence of “fraudulent” digital lending apps is the price the country is paying for rapid digitization and high penetration of mobile services. While financial literacy in the country remains low, access to loans and other financial products is easier through mobile apps. Many shady fintech companies have used the app to contact people in need of easy loans.

When registering, customers provide access to their phone data, from photos to contact lists. After the loan is disbursed, the borrower is “blackmailed” into repaying the loans at exorbitant interest rates, sometimes ahead of the repayment schedule. There are instances where borrowers’ morphed photos were shared with their phone contacts to trick them into repaying the ‘loan’ according to the lender’s terms and conditions. In some cases, harassed borrowers have committed suicide.

While law enforcement agencies have cracked down on many such lending apps, it’s time for the government and various regulators to come together to curb the unchecked growth of these app-based lending entities. The government and RBI have realized this threat and recently announced some measures like creating a whitelist of allowed apps, deregistering inactive NBFCs, and RoCing shell companies. . The RBI has also issued digital lending guidelines to protect the data of borrowers using digital lending apps from misuse.

However, the authorities must not lose sight of the fact that this war must be fought on several fronts. App stores have an important role to play in ensuring that they ban unscrupulous lending apps and ensure that genuine-looking apps don’t become malicious. Unfortunately, app stores have expressed an inability to continuously track lending app activity. The government may have to think outside the box to deal with these criminals, who are not only technologically well-equipped but also financially savvy. It may be time to set up a separate grievance cell that works and responds quickly to any financial fraud.

No matter what you do, loan sharks refuse to leave. They come back in different guises, sometimes better equipped with technology and finding smarter ways to bend the rules. The emergence of “fraudulent” digital lending apps is the price the country is paying for rapid digitization and high penetration of mobile services. While financial literacy in the country remains low, access to loans and other financial products is easier through mobile apps. Many shady fintech companies have used the app to contact people in need of easy loans. When registering, customers provide access to their phone data, from photos to contact lists. After the loan is disbursed, the borrower is “blackmailed” into repaying the loans at exorbitant interest rates, sometimes ahead of the repayment schedule. There are instances where borrowers’ morphed photos were shared with their phone contacts to trick them into repaying the ‘loan’ according to the lender’s terms and conditions. In some cases, harassed borrowers have committed suicide. While law enforcement agencies have cracked down on many such lending apps, it’s time for the government and various regulators to come together to curb the unchecked growth of these app-based lending entities. The government and RBI have realized this threat and recently announced some measures like creating a whitelist of allowed apps, deregistering inactive NBFCs, and RoCing shell companies. . The RBI has also issued digital lending guidelines to protect the data of borrowers using digital lending apps from misuse. However, the authorities must not lose sight of the fact that this war must be fought on several fronts. App stores have an important role to play in ensuring that they ban unscrupulous lending apps and ensure that genuine-looking apps don’t become malicious. Unfortunately, app stores have expressed an inability to continuously track lending app activity. The government may have to think outside the box to deal with these criminals, who are not only technologically well-equipped but also financially savvy. It may be time to set up a separate grievance cell that works and responds quickly to any financial fraud.

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