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At least 58% of Indian citizen were charged an annual interest of over 25 percent, when they or someone in their family/household staff took a loan using instant loan apps in the last 2 years, a report published by community driven social media platform Local Circles showed.
The company surveyed over 27,500 citizens residing in 409 districts of India, and found that 14% of the respondents have used instant loan apps in the last two years. Of these, 58% said that they or someone in their household staff took a loan using instant loan apps since 2020, and were charged annual interest of over 25%.
Also Read: Despite RBI crackdown, instant loan apps continue to boom
The report also showed that with 54% of citizens surveyed saying they or family/household staff experienced extortion or data misuse during the collection process.
As per inputs from consumers, instant loan apps generally charge 30-60% interest rate against a loan of ₹3,000-5,000, and accordingly interest rates vary as per the loan amount and duration to pay back the loan.
Also Read: Extortion, morphed photos: How fraudsters are duping victims on pretext of recovering loans
As per the report, most of the instant loan apps were built during the pandemic who gave money to many who lost jobs.
During the peak of the pandemic, some platforms reportedly charged as much as 400-500% interest rate.
Recently, on 9 June, Governor Shaktikanta Das had said that the Reserve Bank of India (RBI) will soon come out with regulatory architecture for digital lending platforms, many of which are unauthorised and illegal.
There have been increasing cases of alleged suicides of borrowers due to harassment by a few of the operators of digital lending apps.
"I think very soon we will be coming out with a broad regulatory architecture, which should be able to address the challenges that we are confronted with regard to lending through digital platforms, many of which are unauthorised, unregistered and, should I say, illegal," Das said while delivering a lecture on - Indian Businesses (Past, Present and Future).
The governor also cautioned people that most of the digital lending apps are not registered with the central bank and operated by themselves.
However, if RBI receives complaints against lending platforms, which are registered with it, then the central bank will take action, he said.
The maximum number of complaints has been filed in Maharashtra, followed by Karnataka, Delhi, Haryana, Telangana, Andhra Pradesh, Uttar Pradesh, West Bengal, Tamil Nadu, and Gujarat, according to the RBI report.
The Maharashtra police cybercrime team has written to Google Play Store asking to remove 69 loan apps after receiving hundreds of complaints of harassment and threats made by fraudulent loan recovery agents to customers.
