58% of Indian citizens who used an instant loan app in the past 2 years were charged 25% interest: survey
NEW DELHI: At least 14% of Indian citizens have used a snapshot ready app for the past two years to obtain a loan, which then charge a high interest rate on the principal loan amount. This is evident with the fact that 58% of citizens surveyed said they had to pay annual interest of more than 25% through loan applications, according to a survey by LocalCircles.
Among those surveyed, at least 54% of citizens said that they or their family/household staff had experienced extortion or misuse of data during the collection process. citizens also claim to receive phone calls for repayment of loans taken out more than a year ago, even if they paid the amount taken out or more. On the other hand, there are many reports on the personal information of borrowers, including Adhar map, Panoramic map, etc. shared with third-party platforms. People have also reported in a few cases, how their relatives in a different place received messages about the repayment of the loan they had already made some time ago.
These loan apps offer easy and fast loans, trap people with high processing fees, irrelevant taxes and exorbitant interest rates.
The survey received over 27,500 responses from citizens residing in 409 districts of India. 68% of respondents were men while 32% were women.
Reports are full of cases of loan fraud by many mobile apps that offer instant loans. The Maharashta Police Cybercrime Team has written to the Google Play Store demanding the removal of 69 loan apps after receiving hundreds of complaints of harassment and threats made by fraudulent loan collectors to customers.
Last month, Reserve Bank of India (RBI) Governor Shaktikanta Das warned people against unregistered digital lending apps, and so if people have any complaints about such entities, they should file complaints. complaints to the police. However, if RBI receives complaints against lending platforms, which are registered with it, then the central bank will take action, the governor had said. Additionally, the governor said the apex bank is expected to issue guidelines soon to regulate digital lending.
India has witnessed the emergence of instant loan providers through smartphone-enabled fintech lending companies to help people deal with shortages of funds.
Individuals (employees or not) opt for these short-term loans because of the speed with which the application is processed within the same day or within a few days.
The documents sought usually include an ID such as Aadhaar card or Pan card or voter ID card, bank statement and access to social media accounts, contacts, gallery, etc., which must be submitted on their mobile app. For those who are salaried, they look for payroll details for the last 3 months, membership letter, employee id, etc. the amount borrowed and only for the duration of the loan.
The majority of these apps were created during the height of the pandemic, offering loans to people who had lost their jobs, among others.
Some instant loan appsaccording to consumers, charge up to 500% interest rates and use extortion methods to collect money from defaulting borrowers or debtors.
Some consumers reported receiving phone calls for repayment of loans taken out more than a year ago, even though they had paid the amount taken out or more.
In order to protect citizens’ data, the RBI “Cyber Dost” portal contains information that can help citizens verify loan companies. The RBI Governor assured that law enforcement is taking action and urged citizens to file a complaint about such unregistered apps with the police, and advised a person to ensure that the The digital lending app she uses is registered with the RBI.
“There is an urgent need for the Government of India and the Reserve Bank of India to come up with regulatory options that could prohibit coercive recovery procedures, cap the interest rate and require mandatory registrations of all such apps operating in India,” Sachin said. . Taparia, founder of LocalCircles.