“If you have not paid your money today, then I am going to call your friends and relatives. After this, you will regret that you ever decided to take a loan.”
Vinita Teresa has been receiving such phone calls for almost three months and this call is one of them. Nearly every day, calls would come to him in the name of a loan-recovery agent. The names of these agents would have been different but their work would have been the same. He would shout at them as soon as he called. Sometimes he would even threaten and often used derogatory words.
A lockdown was imposed to prevent the spread of corona virus infection in India. But the lockdown caused financial crisis to many people. The months-long lockdown ruined many well-established businesses. The financial situation of Vinita also collapsed due to the lockdown. In such a situation, she switched to those apps which claim to be instant loans.
Taking a loan with these apps was very easy. Wherever to get a loan from a government or non-government bank, many types of documents have to be submitted, verification has to be done, while taking a loan from this app was as easy as a pinch.
All he had to do was to give details of his bank account, provide a valid identity card and give a reference. After giving all this, the loan came into his account. She herself says- “It was very easy.”
Invisible units running such applications mainly monitor your data and can make money by selling this data. They keep an eye on your personal data and they can make money from it. This data can be sold and shared with other criminals, even on the dark web.
The pandemic took away the jobs of millions. Businesses were shut down and in the same period of lockdown, many apps offering such fast loans came into the market.
Now that the lockdown is over and many salaried workers have returned / are returning to work again, it cannot be denied that from engineers to software developers to salesmen to small traders This phase has been very struggle. A large section has faced financial crisis and whenever they needed money in a hurry to overcome it, they chose such apps as help.
All types of loans were available here. For example, a loan of only $ 150 i.e. around ten thousand rupees and for only 15 days. These applications also charged one-time-processing fees for lending. However, these one-time-processing fees were nothing compared to the interest rate, because these loan lending applications have often given loans at an interest rate of more than 30%. If you compare this interest rate with the interest rate of Indian banks, then it is at least 10 to 20% higher.
Another problem is that while some of these apps work according to the standards set for Indian bank, some were not found valid under these standards.
In many states, dozens of such lending apps are now being investigated as many people have accused these apps of violating the rules and using aggressive methods to recover loans.
The Enforcement Directorate probing financial crimes has also come forward to set up a money trail. Recently, Google has also removed many such apps from its Google-Playstore, about which such complaints were received. Or in respect of which evidence of violation of rules has been found.
The authorities have also found evidence that there are many of these apps which were not even registered with the central bank of India. People have been warned to stay away from unauthorized digital loan platforms or apps since these cases related to rules violations and registration have come to the fore.
Experts say that once someone takes a loan, their data is also shared with other apps that give similar loans. After this, the process of notifications to give loans to that person at high credit limits. As the notifications come one after the other, the possibility of that person getting trapped.
Vinita Teresa tells that she took eight loans only by being caught in the circle of these notifications.
But the whole thing is not limited to just taking a loan.
After this, the process of getting trapped in the vortex begins. After taking a loan, the calls from the recovery agents start coming so soon that within a few days you start looking for ways to get rid of them. And in this, there is a way to take a second loan and pay the first loan.
One person, on the condition of not disclosing his name, used to say “It is like a never-ending cycle. One loan after the other … after the other …”
Like many other apps, these loan apps also ask you for access to contacts and photo galleries at the time of download. When the borrower agrees to this, then they start asking for more information.
In December, 17 people were arrested on charges of cheating, forgery and harassment. Police say that they are also trying to find foreign wires connected to this entire system. But experts believe that it will not be easy to establish a relationship between the arrested people and the developers.
(The names and incidents mentioned here were a part of a survey done by BBC India)
Also, read our blog on “10 habits that kept our ancestors young, and how you can adopt them”. Click here.