Aurangabad, Dec 24:
The advent of digital lending apps and portals offering hassle-free loans has become a matter of concern for the banking experts and police. The unlawful means adopted by the apps for recovering loans has shocked many borrowers. The Maharashtra State Bank Employees Federation (MSBEF) has also cautioned the people against such apps.
These apps advertised on social media are luring people for short-term quick loans, without much documentation and quick approval. However, these apps are charging exorbitant interest rates, huge hidden charges and are using unlawful means for loan recovery. Most of these apps have not been registered with the RBI and hence they are not authorised to lend money. Giving more information, Devidas Tuljapurkar, general secretary MSBEF said, "The Reserve Bank of India (RBI) has cautioned the people against digital lending portals and apps through which loan is being extended at exorbitant interest rates, huge hidden charges and unlawful means of recovery are being followed. They are misusing KYC documents such as Aadhar Card, PAN Card and photographs of those to whom the loan is being sanctioned. There have been multiple instances of the app representatives harassing people to the point of suicide. People should guard against such online portals and apps."
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Apps modus operandi
These illegal app-based loans gained prominence because the money is transferred almost instantly, unlike normal loans. When these apps are downloaded, they mandatorily require access to your contacts, video and photo gallery. Once the access is given, you have to share your PAN card and Aadhaar details. However, when the instalment is delayed, the app creates WhatsApp groups with all borrowers contacts and send abusive messages on the group. The borrower is named fraud and his photo is posted to his contacts.
Hidden interest rates
While giving a loan, the app representative says that the interest rate is minimal. But these illegal digital loan apps charge 0.98 per cent per day interest, it works out to an annual interest rate of 66 per cent, which is almost double of the RBI-mandated upper limit of 36 per cent. Moreover, in addition to the interest rate, the borrowers are always charged processing fees, and 18 per cent GST. In some cases, interest is charged as high as 100 per cent.
MSBEF lending assistance
MSBEF has appealed to people who are being harassed by the app to come forward and lodge a complaint with the police. MSBEF is offering its assistance in guiding individuals and in pursuing their complaints with the RBI and government for which people can reach to the federation on email msbef@yahoo.com.