These days every newspaper has been talking about Chinese Loan Apps! Why? Well, because these lending apps have devastated gullible Indian borrowers. But, the story is out. Let’s find out more about it.
Let’s say you are trying to get a loan, but the bank procedure is too rigid, and the disbursement process takes time. Suddenly, you find an app willing to give you a loan without much paperwork or strict guidelines. Moreover, you will get a loan instantly.
The offer sounds interesting. Somewhat unbelievable, right?
The loan gets disbursed, and everything seems great for a while. But these unbelievably good things come at a cost as these moneylenders start charging insanely high-interest rates.
The Framework of These Lending Companies
The concept of Chinese loan scams started way back in 2016 in China. The story is such that students in China often find difficulty in getting loans because of strict guidelines. Hence, these fake moneylenders would disburse a loan and ask for high interest came into the picture.
Later in India, during the lockdown, these Chinese loan apps wooed customers by claiming they would get an interest-free period of 90 days. But they never happened. Moreover, they charge interest rates of 15% daily or weekly.
To understand the extent of these loan apps, let’s look at this story. A Chennai resident took a loan of Rs 3,500 and was asked to pay the entire loan in a week. Due to a delay, the company asked him to download another loan application, take another loan and pay dues. Over a while, he accrued up to Rs 4.5 lakh over 45 mobile money lending applications!
According to Hindustan Times, these Chinese loan app companies have dummy directors, managers and fake digital signatures. These apps access your contacts, gallery, text messages and location before granting a loan. Later, they find ways to extort money from you.
Are These Apps Illegal?
The cyber faculty head of the CDTS, Gurcharan Singh, said that as many as 90% of mobile lending applications are illegal. The Reserve Bank of India has no control over them.
People with less financial knowledge often fall prey to such scams.
What Must Borrowers Do?
As borrowers, we must stay cautious as the number of unauthorised digital lending platforms or mobile apps is increasing.
The Reserve Bank of India has also addressed the issue and asked borrowers not to share their copy of KYC with unauthorised lenders or apps. If you wish to take a loan, approach RBI registered Banks and NBFCs, as they are strictly regulated and are safe lenders.
It’s time to stay aware and make rational decisions regarding finances.
Until then, don’t forget to share this article with your friends.