While 58% of citizens said that when they or a family member/house staff took out a loan using instant loan apps in the past two years, annual interest of more than 25% had been charged to them.
More than 54% of citizens surveyed experienced data extortion or misuse during the collection process, according to the report by community-based social media platform LocalCircles.
The platform wrote to the RBI Governor on Tuesday
According to MeitY, it blocked 27 of these scam instant loan apps.
The RBI has also banned non-bank prepaid payment instruments (PPIs) from charging credit.
“The PPI-MD (PPI-master direction) does not allow the loading of PPI from credit lines. Such a practice, if followed, should be stopped immediately. Any non-compliance in this regard may result in criminal prosecution under the provisions contained in the Payment and Settlement Systems Act, 2007,” according to the latest RBI guidance.
Maharashtra Police cybercrime team recently wrote to Google Play Store, asking to remove 69 loan apps after receiving hundreds of complaints of harassment and threats made by fraudulent loan collectors to customers.
India has witnessed the emergence of instant loan providers through smartphone-enabled fintech lending companies to help people deal with shortages of funds.
Some instant loan apps, according to consumers, charge up to 500% interest rates and use extortion methods to collect money from defaulting borrowers or lenders, according to LocalCircles.
“Some citizens also claim to receive phone calls for repayment of loans taken out more than a year ago, even though they have paid the amount taken out or more,” the report said.
On the other hand, there are many reports on the personal information of borrowers, including
“People have also reported in a few cases how their relatives in a different location received messages about paying back the loan they had already made some time ago,” the report noted.
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