In a recent development, the cyber wing in India has proposed a ban on 18 more loan apps, adding to the growing list of apps facing strict action. This comes after the cyber wing had written to hosting platforms last week, urging them to remove around 70 apps that had received numerous complaints.
According to sources, out of the recommended 70 apps, 25 have already been removed from the platforms in a short span of time. The decision to crack down on these loan apps comes in light of multiple instances where borrowers were allegedly blackmailed and subjected to usurious practices.
The predatory approach of these loan apps has been a cause of concern, with some recent suicides in the state reportedly being linked to the harassment faced by borrowers. Chief Minister Pinarayi Vijayan has also directed the police to take all necessary steps to restrict the operations of such apps.
The Growing Menace of Predatory Lending
Predatory lending refers to the practice of providing loans to borrowers at extremely high interest rates and unfair terms, often with hidden fees and charges. These loan apps typically target individuals who are in urgent need of funds and are unable to access traditional banking services.
The modus operandi of these apps involves collecting personal and financial information from borrowers and then using it to harass and intimidate them. Borrowers are often subjected to constant reminders, threats, and humiliation for loan repayment, leading to extreme levels of stress and mental anguish.
Additionally, many of these loan apps charge exorbitant interest rates, sometimes as high as 200-300% per annum, trapping borrowers in a cycle of debt. The lack of regulation and oversight in the digital lending space has allowed these apps to exploit vulnerable individuals, pushing them further into financial distress.
Need for Strict Action
The proposed ban on these loan apps is a step in the right direction towards curbing predatory lending practices. It sends a strong message to the industry that such exploitative practices will not be tolerated. By removing these apps from hosting platforms, the cyber wing aims to protect borrowers from further harm and prevent more individuals from falling victim to these predatory schemes.
However, a comprehensive approach is needed to effectively address the issue of predatory lending. This includes strengthening regulatory frameworks, increasing consumer awareness about responsible borrowing, and promoting financial literacy among vulnerable sections of society.
Furthermore, collaboration between law enforcement agencies, financial institutions, and technology platforms is crucial to identify and take swift action against fraudulent loan apps. By working together, we can create a safer and more inclusive financial ecosystem that prioritizes the well-being of borrowers.
The ban proposed on 18 more loan apps in India marks another significant step in the ongoing crackdown on predatory lending. It highlights the commitment of authorities to protect borrowers from unscrupulous practices and ensure their financial well-being. However, sustained efforts are needed to address the root causes of predatory lending and create a more resilient financial system that serves the needs of all individuals.