Apps and digital lending portal become a concern
Aurangabad, December 24: The advent of digital lending apps and portals offering hassle-free loans has become a matter of …
Aurangabad, December 24:
The advent of digital loan applications and portals offering hassle-free loans has become a matter of concern for banking experts and law enforcement alike. The illegal means adopted by apps to collect loans shocked many borrowers. The Maharashtra State Bank Employees Federation (MSBEF) has also warned the population against such applications.
These apps advertised on social media lure people in for quick short term loans without a lot of documentation and quick approval. However, these apps charge exorbitant interest rates, huge hidden fees, and use illegal means for loan collection. Most of these apps have not been registered with the RBI and therefore are not allowed to lend money. Giving more information, Devidas Tuljapurkar, General Secretary of MSBEF, said: “The Reserve Bank of India (RBI) has warned people against digital lending portals and apps through which loans are made to exorbitant interest rates, huge hidden fees and illegal means of collection are tracked. They misuse KYC documents such as Aadhar card, PAN card and photographs of those to whom the loan is sanctioned . There have been several instances where app representatives harassed people to the point of committing suicide. People should guard against such online portals and apps. “
How the applications work
These illegal app-based loans have grown in importance because money is transferred almost instantly, unlike normal loans. When these apps are downloaded, they necessarily require access to your contacts, videos, and photo gallery. Once access is granted, you need to share your PAN card and Aadhaar details. However, when the payment is delayed, the app creates WhatsApp groups with all borrower contacts and sends abusive messages to the group. The borrower is named fraudster and his photo is posted to his contacts.
Hidden interest rates
While granting a loan, the app representative says the interest rate is minimal. But these illegal digital lending apps charge 0.98% interest per day, which works out to an annual interest rate of 66%, almost double the upper limit of 36% imposed by the RBI. Moreover, in addition to the interest rate, borrowers still have to pay a processing fee and 18 percent GST. In some cases, interest is charged up to 100 percent.
MSBEF loan aid
The MSBEF called on those harassed by the application to come forward and file a complaint with the police. MSBEF offers assistance in guiding individuals and pursuing their complaints to the RBI and the government. Individuals can contact the federation by email [email protected]