The Bengaluru victim was threatened with exposing intimate photographs for failing to repay the debt
Karnataka government says it will take action against 42 digital lending apps to curb the menace of predatory recovery practices by digital loan sharks
A week ago, Apple delisted at least six digital lending apps from App Store for flouting developer guidelines
In yet another instance, a 22-year engineering student died by suicide in Bengaluru after being allegedly harassed by digital loan sharks.
According to Moneycontrol, the victim, who took out a loan on behalf of his friend, was constantly harassed by recovery agents after the friend failed to pay the instalments. The report claims that the borrower, unable to cope with the harassment, took his own life.
The matter involved a Chinese lending app called Slice and Kiss. The victim was allegedly threatened multiple times over the phone, including threats to expose intimate photographs of the victim if he failed to repay the debt.
The incident came to light after the family filed a complaint with the Jalahalli police station, claiming that the digital lending apps led to the demise of their son. The victim’s father claimed that against a loan of INR 30,000, the victim was billed INR 46,000 along with interest and other late fee charges.
Swinging into action, the BJP-led opposition raised the issue in the state Legislative Council and flagged the harassment of borrowers by digital lending apps. Responding back, state Minister Dinesh Gundu Rao told the Council that the central government oversaw the space, adding that it was not solely the state government’s responsibility to take action in the matter.
As per the report, Rao added that local authorities had already discussed the matter with the union government and tech major Google (which runs the app marketplace Play Store), and that action will be taken against 42 lending apps for harassing people.
It is pertinent to note that the Congress government, which recently came to power in the state, had promised to formulate a framework to regulate online lending apps. The policy is yet to be devised.
This follows a spate of similar instances involving predatory lending practices employed by digital loan sharks.
The incident in Bengaluru occurred hours after a couple and their two children reportedly took their lives in Bhopal, Madhya Pradesh, following the leakage of an objectionable image of the deceased man to his contact list by loan app operators.
The couple is said to have been allegedly forced by a digital loan company to cough up INR 17 Lakhs in return for a loan.
In the past few years, many illegitimate digital lending apps have mushroomed in the country, many with links to Chinese entities and nationals. The allure of these apps has been that they offer small-ticket size loans quickly, compared to traditional banks, which take extended time.
Once lured, these apps, in many cases, take over access to the borrower’s phone and then allegedly threaten the victims with morphed or objectionable images to get their money back.
Such has been the growing menace of these apps that Apple recently delisted at least half a dozen lending apps on its App Store. Earlier this month, even the Bihar Police wrote to the Ministry of Electronics and Information Technology (MeitY) to ban more than 100 illegal loan lending apps for money laundering and posing a ‘potential threat to the financial security of the nation.’
Amid a spurt in such suicide cases, the centre has cracked the whip on such platforms. The RBI has issued digital lending guidelines and even forwarded a whitelist of digital lending apps to app marketplaces to curb the menace of these digital loan sharks. Earlier this year, MeitY blocked access to more than 138 betting and digital loan apps with links to China.
In addition, the Enforcement Directorate also recently provisionally attached assets worth INR 106 Cr belonging to several lending app operators for violating anti-money laundering norms. Despite the crackdown, the sage of deaths by suicide continues unabated.