NEW DELHI: Several Indian states have reported cases of suicides by people who took loans from digital lenders but the payout process became so harassing and torturous that they instead chose to end their lives.
While the Reserve Bank of India (RBI) and the government have initiated efforts to check the harassment of loan takers, many of these apps have been found linked to China and Hong Kong, and cryptocurrency-based money laundering channels.
According to reports, the Ministry of Home Affairs has fixed its radar to catch the “predatory practices” of instant loan lending apps, which not only extort and threaten users but also stoop to the level of maligning their public image.
There have been instances of people committing suicide due to the torture by such apps for repayment as they were threatened that delay in returning the money would lead to circulation of their and their family members’ morphed images on social media.
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Such cases and stories of trauma also came to the fore from Maharashtra, Karnataka and other parts of the country.
According to MHA sources, 300 of such instant loan apps could be subject to harsh punishment, including a complete ban. The apps have been linked to China and are suspected to be one of the biggest money laundering scams.
Usual Cases Of Trap
The syndicate uses access to a loan taker’s smartphone data to extort exorbitant sums of money by luring helpless people into debt traps.
Consider a situation where you urgently require money but do not have requisite collateral and time to complete the necessary paperwork for a bank loan.
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Around the same time, your smartphone displays a pop-up notification, offering immediate, no-questions-asked loans. You download the app, register, and agree to the required data access permissions as you would with other apps.
The loan amount is deposited into your account shortly and without any hassles.
After a week, the app starts sending you messages asking for repayment.
The required repayment amount is equal to or greater than the original loan amount.
The frequency of the messages increases, and their tone becomes more unsettling. The demand for repayment quickly develops into blackmail when you are threatened with telling your family, friends, and co-workers about your precarious financial situation.
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Predatory lenders follow through on their threat and, using your contact list and photos as a means of communication, send disgustingly explicit messages to your social circle that belittle the dignity of the women in your family.
This nightmare is a reality for many families across several states. It has resulted in fatalities in several tragic cases, prompting government intervention and the work of numerous investigative agencies.
Central Agencies Also Monitoring Lending Apps
According to reports, the Enforcement Directorate, Serious Fraud Investigation Office, Intelligence Bureau, R&AW, and Reserve Bank of India are all keeping a close eye on such apps.
Previously, the RBI also expressed concern about such apps, and according to sources, the Home Ministry requested input from the agencies before taking action.
Following reports that the governments of Telangana, Uttar Pradesh, Gujarat, Delhi, Punjab, and other states were requesting the intervention of the Centre and central agencies against “harmful financial products,” the Home Ministry made its move.
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Telangana has proven to be a fruitful hunting ground for the players behind these apps out of all of these states, according to the reports.
A rough estimate provided to the central government by the state police forces indicates that there are currently close to 1,000 of these loan lending apps available, with new ones constantly being released, the report stated.
Due to the pan-India nature of the operation, it is impossible to estimate the total amount of money in circulation as a result of these apps.
However, a report by the detective division of the Hyderabad Police claimed that a Chinese national operating four shell corporations had carried out 1.4 crore transactions totalling approximately Rs 21,000 crore.
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These apps have between 50,000 and 10 lakh downloads, and their Google Play Store ratings range from 3.5 to 4.8.
According to investigations conducted by the state police forces, call centres connected to such apps typically employ 300–350 people.
Few exporters dealing with China were discovered as a result of the Telangana police investigation, which investigators believe to be the source of money laundering.
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