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Current Affairs

Instant loan apps case

Date: 26 December 2020 Tags: IT, Mobile & Computers

Issue

A woman employee of Telangana Agriculture Department and a software engineer died by suicide after they were humiliated and blackmailed by tele-callers and recovery agents of a mobile app instant loan company. 

 

Background

Their personal details were posted by the company on social media and labelled them defaulters and used abusive language.

 

Details

  • It is a racket in which instant personal loans are offered through mobile apps at exorbitant interest rates by unauthorised lenders.

  • Of the numerous apps that are available on Google PlayStore, most do not have any tie-up with any bank or Non-Banking Financial Institution.

  • A customer can avail a loan within a few minutes after uploading personal details, three months’ bank statement, Aadhar card copy and PAN card copy on the app. Loans from as less as Rs 1,000 to Rs 50,000 can be availed for seven days.

  • The lending companies have call centres in Hyderabad and Gurugram from tele-callers and recovery agents interact with burrowers. 

 

Mode of operation

  • After a customer downloads an app and uploads the documents demanded, the loan amount is credited into the bank account.

  • The phone numbers of the customer as well as numbers of his family members are shared by the app company with others.

  • After a customer avails one loan, tele-callers and agents of about 20-30 similar apps call the customers and lure them into availing more loans, saying they are eligible because their credentials have been verified by the company from which they borrowed the first loan.

  • While the interest rate is 35 per cent, after the due date, a flat Rs 3,000 penalty per day is levied on the customer. 

  • Apart from levying hefty penalties for failure or delay in repayment of loan, the agents use a combination of coercion, blackmail, and threats. 

  • The treatment of a customer depends on which bucket the customer is in. Immediately after the due date, a customer will be harassed with dozens of calls.

  • Later abusive calls will be made to family members and threats and blackmail start. Finally, they access the contacts of relatives and friends of the customers and send them WhatsApp messages defaming the defaulter.