How to sidestep the great app trap: Instant money, dire results

economictimes.indiatimes.com:

Instant loan apps have changed the way people get loans. They have made it far quicker and easier. Digital loans refer to financial credit that is applied for, processed, approved, and disbursed entirely through online platforms or mobile apps without the need for physical paperwork or in-person interactions. Amid wide ranging concerns about digital lending, an industry body has said its 37 member entities witnessed a 49 per cent surge in disbursements at Rs 1.46 lakh crore in financial year 2023-24. According to Fintech Association for Consumer Empowerment (FACE), the number of loans disbursed grew by 35 per cent to over 10 crore borrowings in FY24.

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This rush in digital lending comes with the rise of unauthorised lending apps. The government has shut down 379 websites hosting such illegal loan apps between October 2023 and March 2024, the Rajya Sabha was informed on Thursday. Such apps lure gullible borrowers in deceptive ways with attractive offers and later harass them. Two months ago, a 33-year-old man died by suicide at his Pudupet residence on Thursday, allegedly shamed by suspected unethical loan recovery tactics adopted by an instant loan app company. He used to borrow money through a loan app and repay it. He had taken a loan of Rs 40,000 through the app and had already paid more than what he had borrowed with interest. As he was yet to pay Rs 18,000 more, workers of the loan app company had been hounding him.

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