Debt, threats from loan sharks, and despair led a woman, 24, to murder her own grandmother and steal her gold ornaments Tuesday morning, raising serious concern over the racket of luring people into taking instant loans via mobile apps only to then extort money from them which has gained momentum since the Covid-19 pandemic.
According to data shared by the Pune cyber cell, complaints of harassment through instant loan apps have increased by 376% after the Covid-19 pandemic. In 2019, the cyber cell received 322 complaints about instant mobile loans, with the number increasing to 837 in 2020; 928 in 2021; and finally, 3151 in 2022.
Kumar Ghadge, police inspector, Pune cyber cell, said that these mobile apps disburse even small amounts at much higher rates (12 to 15%) than the market. They do not follow the strict procedures followed by banks before disbursing loans. Customers only need to fill an online form with details after downloading the app. Importantly, customers need to give access to their mobile phones, contact lists and cameras to the loan provider company and the same is later used against them. Some of these apps even recover interest on a daily or weekly basis. Loans are disbursed for a period of 15 days or one/two/six months. If anyone fails to repay the loan on time, the amount increases by compounding interest and that’s when the trouble starts. According to the police, the loan providers in such cases make abusive calls to each and every number on the customer’s contact list. In some cases, they take the customer’s photograph/video using his/her camera and post morphed versions on social media sites to defame him/her. As per the Pune cyber cell, this trend of giving instant loans and extorting money has risen. In Pune alone, more than 3,000 complaints have been received in the first eight months of 2022.
Bhagyashree Navtake, deputy commissioner of police, Pune cyber cell, said, “Yes, complaints are increasing and considering the relaxation of various norms and instant money, many people are getting trapped. However, we appeal to the people not to download such apps. They can legally apply for loans instead.” Navtake urged people facing such harassment to contact the nearest police station for help.
Another officer from the Pune cyber cell said that almost all such instant loan apps are illegal and tend to violate the lending norms prescribed by the Reserve Bank of India (RBI). The central government and RBI should ban all such apps, the officer said. The Pune cyber cell has urged people to first verify the credentials of the instant loan app developer before downloading the app. There are 577 financial institutes listed by the RBI which can lend money to people.
Case studies
A student from Shivajinagar, 18, had applied for a loan of Rs2,000 for seven days to fulfill his personal needs. He had to repay Rs5,000, including the principal and interest, after seven days. Somehow, he failed to return the amount on time and started receiving threatening calls from representatives of the mobile app right from 6 am. One day, the representatives of the loan provider shared his morphed video with him and threatened to make it viral on social media to defame him.
Last year, Mahesh Mane from Warje-Malwadi, applied for a loan of Rs10,000 on a Chinese instant loan app. After he failed to repay the loan amount, initially his friends and relatives and later his office colleagues started getting abusive calls from representatives of the loan provider. Mane somehow managed to repay the loan but recalls the experience till date.
In January 2022, a woman from Hadapsar, 45, downloaded a similar such Chinese instant loan app and applied for a loan of Rs25,000. The loan amount was credited to her bank account within one day without any documents. When she failed to repay the loan amount, she started getting abusive calls. A week later, a morphed video of her was shared with her relatives by an unknown number.
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