What is irresponsible lending?

Irresponsible lending occurs when lenders provide loans without adequately assessing the borrower’s ability to repay, often leading to financial distress. This includes offering loans with high-interest rates, hidden fees, or to individuals with poor credit histories without proper checks. Such practices can result in increased defaults, financial instability for borrowers, forcing the borrower into a debt trap and there can be potential regulatory consequences for lenders.