The crackdown on rapid lending applications, which entice clients into debt traps by offering modest loans at exorbitant interest rates and short payback terms, has exposed a Rs 21,000 crore racket, according to authorities. At least three suicides in Telangana have been linked to the apps, and the arrest of a Chinese person who operated call centres that directed the primitive but rapidly increasing activities has shown a Chinese connection.
The convenience of getting a loan was the hook that drew cash-strapped customers in. The loan was credited to bank accounts without the need for direct communication with creditors. Instead, the loan was credited to bank accounts by simply installing a mobile app that asked for permissions such as access to phone contacts, entering personal and Aadhar credentials, and bank statements. When clients defaulted, additional applications with whom their data had been unlawfully shared swooped in and offered loans to repay the previous loan, resulting in a vicious debt cycle.
Customers were also allegedly subjected to a barrage of harassment from collection agents, who defamed them on social media and gained access to their phone numbers. These immediate lending applications, which have no ties to any RBI-approved financial institution, underline the dangers posed by the digital economy's rapid evolution, with regulators and law enforcement constantly one step ahead of fly-by-night operators. This dilemma will be exacerbated by the economic crisis and a lack of access to institutional finance. The necessity of the hour is for modern policing to face cyber dangers, as well as a solid data protection law to safeguard customers from online abuse.
Conclusion
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