Millions of Indians experienced financial difficulty as a result of the global pandemic. This includes job losses, wage reductions, and a rise in medical costs. Numerous loan apps that provided rapid cash with little paperwork took off in this environment. The regulator has already cracked down on many of these, although some are still in operation.
Their strategy is straightforward: Companies who are not under RBI regulation manufacture illegal loan apps. They entice clients by promising immediate cash, frequently at exorbitant rates and hidden fees. The lending apps request authorization to access customers’ emails, messages, and other private information. Then, if the repayment terms are not followed, they threaten to humiliate consumers publicly by illegally accessing information from their mobile phones or by telling their personal connections that they are unable to pay back their EMIs on time. Data gathered by RBI in 2021 can be used to estimate the size of the issue. The RBI discovered 1,100 distinct Indian lending apps, of which 600 were illegitimate, spread over 81 app shops during the course of two months in January and February.
By being aware of such fraudulent apps and taking the required safeguards when applying for loans, you can protect your money and reputation.
Each and every digital lending app must register with the RBI. Before applying for a loan, you must verify the company’s official RBI registration number and loan-offering authorization.
Check the loan agreement and carefully read the terms and conditions. The amount being borrowed, the interest rate, the monthly payment amount, the length of the payback period, etc. should all be clearly stated.
Red flags to watch out for include:
1. There is no company website.
2. Any unusual KYC procedures being used, or any needless requests for additional personal or financial information from you
3. An application requesting access to read your private