Some were in Maharashtra, Gurugram and Hyderabad

Some were in Maharashtra, Gurugram and Hyderabad

Chennai Police Commissioner Mahesh Kumar Aggarwal said, «After working on certain leads, the team found that the addresses of these loan apps were mostly in Bengaluru. The team analysed the complainant’s bank account in which he had received the loan amount and the accounts into which he had repaid the sum. It then raided a call centre functioning under the name, True Kindle Technology, at HSR Layout in Bengaluru.»

The police forces conducted raids and arrested 17 people in Hyderabad and Gurugram in connection to illegal instant personal loan mobile apps after three people died by suicide due to harassment by employees of these apps. The Hyderabad police froze 75 bank accounts that accounted up to Rs 423 crore in connection with a multi-crore money lending scam.

At least 60 such loan apps available on Google Play Store were not registered or recognised by the Reserve Bank of India (RBI) as a Non-Banking Financial Company (NBFC); this makes their operation illegal, Telangana DGP’s office said.

The RBI has now issued a statement, cautioning individuals and small businesses against falling prey to the growing number of unauthorised digital lending platforms or mobile apps.The RBI has asked people not to share a copy of KYC with such unauthorised lenders or apps. In case of any suspicion, people can lodge complaints with enforcement agencies or directly through the Sachet portal.

Banks and NBFC’s that are registered with the RBI can be safe lenders and the same can be verified on the RBI website.

THE HISTORY OF MOBILE APP-BASED LENDING

P2P lending became a very popular option for Chinese borrowers in 2012. Thereafter, the industry grew rapidly with the number of lenders increasing from a mere 50 to around 3,500. With the advancement in mobile technology and social media, the same moved to a different platform.

The emergence of mobile app-based lending first started during late 2015 in China, which was historically a cash-heavy country and rather adverse to credit. The development of new payment methods (e.g. Alipay, WeChat Pay) has helped change the Chinese mindset and paved the way for the growth of the P2P lending sector.

With app-development becoming cheaper and easier, owing to cloud technology, the lending system moved to mobile applications. The initial absence of lending regulation sparked growth and encouraged firms to innovate and expand. Despite its significant success, the sector started seeing a downward trend.

Trouble started brewing in China in late 2016, when statistics released by the Chinese Banking Regulatory Commission showed that about 40 per cent of P2P lending platforms were in fact Ponzi schemes.

Consequently, this has forced authorities to tighten regulations with the introduction of over 100 new rules, gradually implemented in order to eliminate fraudulent or poor business practices that plagued the industry.

This triggered the shutdown of P2P lending platforms; over 900 closed by the end of 2016. For 2018, only 1,021 providers remained in place. Owing to this, the business owners have shifted their bases from China to other countries.

MODUS OPERANDI IN INDIA

The recent cases of suicides in Hyderabad have happened due to the extreme harassment faced by borrowers. Like the case of Li Li in China, there have been multiple instances of the app representatives harassing women borrowers for delay in repayment of loans. An employee of the fintech app ‘Udhaar Loan’ asked a girl in Tamil Nadu to video call him naked if she did not pay the loan on time online payday loans Arkansas. She attempted suicide in .

India’s Google Play Store has a plethora of such lending applications, with most of them being owned by Chinese operators or companies. Some of these are Bubble Loan, Liquid Cash, Cash Bee, Rupee Factory, Paisa Loan, SnapIt Loan, In Need, Rupee Plus, Pan Loan, Cash Port, Wow Paisa, Gold Bowl, Ok Cash, Udhaar Loan, Go Cash, FlashCash, Cash Pot, One Hope and Bily Cash.

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