During the COVID19 pandemic, the digital revolution in India led to the emergence of financial requirements which increased the demand for loans. With an increase in lending money from illegal loan apps to gullible people, there have been some serious matters, such as suicides and even job losses due to illegal loan apps harassment.
Recently, a man lost his job. The reason had nothing to do with his performance or falling revenue. He was defaulted on his loan from an illegal loan apps and the recovery agents demanded his employer to pay on his behalf. They harassed the man by stealing his contact details and contacting his relatives and colleagues.
For months, he was getting threats that deteriorated the situation. For repayment of the loan, they started abusing his parents and wife. He struggled to make payments on the loan with high interest rates.
As digital lending explodes across India and other developing economies, cases like these are becoming more common. During the time of financial need, illegal apps that promise quick cash have mushroomed. Many lenders take advantage of borrowers who lack financial literacy.
They charge huge amounts of interest rates and in some cases, they also add late fee. They employ heavy-handed collection tactics that Indians have linked to a string of suicides.
Increasingly, technology and regulations have provided access to illegal services. RBI recently blocked more than 600 illegal apps from Google Play store to protect borrowers from deceptive and exploitative actions. It has been observed that China, Indonesia, and Kenya are the startups promising easy cash to the people.
Due to the country’s poor connectivity of action and sheer size, it is difficult to protect borrowers from them since they do not have access to formal credit. Although complaints about harassment by digital lenders are increasing day by day, India’s ambition to become a haven for tech innovation is in danger.
Millions of Indians rely on the illegal loan apps, and there is often no clear-cut way for borrowers to discern the legal from the shoddy loan.
Efforts to stop illegal loan apps have led to mixed results
After flags were raised by Indian officials, the Reserve Bank of India (RBI) and Google have reviewed hundreds of apps on the Google Play store. In addition, the application must have a lending license and cannot demand full repayment in less than sixty days.
The Reserve Bank of India (RBI) imposed stricter rules on banning apps, but they simply shifted their advertising strategy to text messages. Consumers take loans from these illegal apps and these apps in turn, use mafia-like collection tactics.
The Reserve Bank of India is trying to tighten the digital lending rule. Guidelines under consideration include severe penalties for non-compliant apps, with a particular focus on weeding out unregulated loan providers. In order to save lives, the correct course of action must be taken. Basic awareness about the financial literacy is necessary among the people to educate them about the traps of illegal loan lenders.
If you or someone you know has been a victim of illegal loan apps, there are solutions for you. SingleDebt can help cease harassment from these agents and handle the legal side for you. We urge you not to resolve this alone as this can lead to further harassment. Contact SingleDebt on +91 961 910 3594 or fill out the form either on the home page or contact page.