D.S. Aravind, a Hyderabad resident, borrowed Rs 3,500 via an instant loan app in November, but after subtracting procedure fees and interest, the finance provider, MyBank app, only issued Rs 2,600. Aravind was given extra features because he paid on time, within a week, and he borrowed Rs 30,000, for which he was ordered to repay Rs 55,000 within a week. MyBank customer service personnel allegedly threatened to alert his family and acquaintances about the default if he did not reimburse the money.
Despite Aravind's request for two more days to repay, the executives allegedly threatened to publicly humiliate him and imposed a Rs 3,000 per day fee. They also allegedly created ten WhatsApp groups, added Aravind's friends to them, and began distributing modified photos of him and his mother to put pressure on him. On December 20, Hyderabad police filed a complaint under various provisions of the Indian Penal Code (IPC) and the Andhra Pradesh (Telangana Area) Money Lending Act in response to his complaint.
In response to a slew of similar accusations, the city police dispatched teams to Delhi and Bengaluru to locate and apprehend people behind the questionable app-based rapid financing platforms, as well as verify the locations of their offices and call centres.
"Four organisations were running thirty loan apps, two each in Hyderabad and Gurugram. Approximately 1,100 employees worked as tele-callers in these four offices to run multi-billion dollar illicit companies that victimised thousands of people across the country. Anjani Kumar, the Hyderabad police commissioner, said, "Eleven persons have been detained and 700 computers have been seized."
Liufang Technologies Private Limited, Hotful Technologies Private Limited, Pinpoint Technologies, and Nabloom Technologies Private Limited, all of which are registered in Bengaluru, according to police. In Hyderabad and Gurugram, they established call centres and hired executives to entice customers and subsequently profit from defaulters. "These callers were following orders from their bosses in Indonesia." "Like the multi-crore colour prediction game fraud that we exposed earlier this year, the entire enterprise appears to be operated by Chinese people," Kumar says.
In the wake of the death by suicide of a jobless techie, P. Sunil, in Hyderabad on December 16, and the death by suicide cases of Eddu Shravan Yadav in Narsapur in Medak district and Kirni Mounika in Siddipet district, allegedly due to harassment by app-based loan companies over repayment, the Telangana police have stepped up their investigation.
Sunil, 29, was arrested after police discovered he had taken a loan of over Rs 2 lakh from an instant loan app. They added sections 420 (cheating), 306 (suicide attempt), 504 (intentional insult with intent to cause breach of peace), 506 (criminal intimidation) to the IPC and Section 67 of the IT Act to the original case.
The phone numbers used by the lenders to connect with the loan-takers and their relatives are being tracked by the state's cybercrime investigators. According to the police, there are at least 60 lending apps on Google Play Store that are neither registered or recognised as non-banking financial enterprises by the Reserve Bank of India (RBI) (NBFCs). To help in the probe, the authorities have written to Alphabet Inc, which owns Google, requesting technical hosting details as well as the app-based loan providers' online payment gateway link-ups. The authorities admit that information given by Google, PhonePe, Paytm, and other online wallets is crucial to a breakthrough in the case.
Despite the RBI's repeated warnings about financial fraud, certain microfinance providers are said to be injecting money into loan applications. These loans are given out as personal loans with higher interest rates and are referred to as subprime loans. In most circumstances, the interest rate is between 18 and 40%, and in certain cases, it can be as high as 150 percent. This is in addition to the processing fees that have already been collected.
Some businesspeople and moneylenders from Hyderabad and Gurugram are suspected of being involved in the scam, according to the police. All of these programmes appear to be based on the same software development kit, which is thought to have been purchased from China. Police discovered that these app companies collected sensitive data from clients' phones, including as contacts and images, and used it to put pressure on them to repay loans.
According to the police, NBFCs are only authorised to function in accordance with the regulations after registering under Section 45-1A of the RBI Act, 1934. Unregistered NBFCs, according to the RBI, are not legal tender.
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