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Online loan sharks on the loose

They lend money for short term and collect huge interest from borrowers, which is sometimes 23 per cent of the loan amount

By C. Romeo

Updated On - 19 December 2020, 12:45 AM

Online loan sharks on the loose — Representational Image

Hyderabad: The worldwide web can turn into a dangerous web of deceit in no time, with several illegal operators misusing loopholes and exploiting the helplessness of people.

The danger was always there, with the Covid-19 pandemic pushing more people into the zone of danger, as the case of B Sunil, a software professional who ended up taking his own life unable to take the pressure from executives of an online loan app.

Preliminary investigation revealed that Sunil had borrowed loans from not one or two, but at least 35 apps. “While some private companies create and fund such apps, there are others who develop software and give it to companies on an agreement,” a Cybercrime official said.

Non-Banking Finance Companies (NBFCs) are also regulated by the Reserve Bank of India and though some of the firms running these money lending apps were registered with the RBI, their modus operandi was illegal.

“They lend money for short term, like a week or two, and collect huge interest that is sometimes 23 per cent of the loan amount. If you do not repay, they impose fines too. That is illegal,” the official said.

Sunil too could not return the sum within the allotted time. What happened next was full-scale cyber-bullying, allege his friends and family. “Whenever, we download such apps, they ask us to allow or deny access to our phones. Unless we allow, we cannot proceed. As part of the formality to obtain a loan, we have to give the app access to all the contacts in the phone,” the official said, adding that this was also illegal. The calling of numbers from the contact list if the user defaulted on payment too was illegal.

“In some cases, companies created multiple WhatsApp groups with the title saying the person was a fraud and put up their pictures in it to pressurise them to return the money,” a senior official said, adding that Telangana Police had registered at least three cases of suicide due to harassment caused by money lending apps in the last one month. These were in Medak, Siddipet and Cyberabad.

There are at least 60 such loan applications available in Google Play Store which are not registered or recognised by the RBI and are thus illegal, the police said.