Reserve Bank of India Governor Shaktikanta Das said on Thursday that a broad regulatory architecture would be established soon to deal with predatory loan apps.
“With regard to lending by digital platforms…that is a work in progress…and I think very soon we will be coming out with a broad regulatory architecture which should be able to address the challenges that we are confronted with, with regard to lending through digital platforms many of which are unauthorized, unregistered and should I say illegal,” he said at the launch of the Central Board of Indirect Taxes’ e-lecture series on successful and sustainable business.
Over the past one year, thousands of people have fallen prey to predatory loan apps in the absence of any regulations, suffered even sexual harassment and ended up paying extortion money to loan recovery agents.
The Indian Express reported on April 16 about how a 24-year-old woman was allegedly called from 25 different mobile numbers, sexually harassed and forced to pay Rs 4.50 lakh for a loan she claims she never took.
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On May 4, a 38-year-old salesman, Sandeep Korgavkar, died by suicide at Kurar in suburban Mumbai owing to sexual harassment from loan recovery agents. The agents allegedly morphed his head on to a nude body and circulated it to colleagues, neighbors, friends and family members.
The digital loan apps loan small sums such as a few thousand rupees without much hassle but ask for access to customers’ contact lists. Harassment along with pressure to repay the loan with a heavy interest starts within weeks of securing it.
As part of the harassment, customers are called from multiple numbers and abusive text messages are sent to them and people on their contact lists. Loan recovery agents, who often use only WhatsApp to make calls, have also circulated morphed pornographic videos of defaulting customers.
The agents thus end up extorting much more money than borrowed by the customers.