Getty Images / WIRED
It was a normal day in the Panditi household. On December 16, software engineer Sunil Panditi was getting ready for his first day at a new job while his wife Ramya Sri was bathing their young son. Sunil was expected to leave the house by 10am, instead he texted his new boss that he wouldnât make it into work. Shortly before 1.30pm Panditi went to his bedroom and took his own life, unable to forget the string of messages that had haunted him for the past week.
The 28-year-old, who lived on the outskirts of the Indian city Hyderabad, had taken out Rs 70,000 ($956) in loans from at least 35 instant loan apps over six months after losing his job during the pandemic. As the date to repay each of his microloans inched closer, he started borrowing from one app to repay the others, but kept falling short. Each deadline piled on more stress. Things got so desperate that he secretly started using his wife Sriâs phone to borrow money.
Morning Brief (ET Bureau)
Indulekha Aravind | 17:29 Min | January 19, 2021, 8:00 AM IST
The growing number of unregulated loan apps, many with Chinese links, and the harassment of borrowers has caught the regulator s eye. Srikanth L of advocacy group Cashless Consumer and ET’s Shailesh Menon and Venkat Ananth discuss the modus operandi of these apps, how they proliferated with ease and the red flags to watch out for.
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Little did she know she would have hell to pay for choosing such a convenient lender. It was all good as long as she paid her dues on time. “Because of some issues with the bank”, she missed one cycle. Anitha was willing to even pay a late fee. Before she could put that in motion, she started getting phone calls and WhatsApp messages from recovery agents. The calls became progressively more menacing and insulting. “They started becoming abusive. It was 2-3 weeks of constant harassment. I was nearly suicidal, ” she recalls.
The Menace of Usurious Lenders Operating through Chinese Loan Apps
Moneylife Digital Team
5
After the sterling groundwork of Telangana police, officials from across India are arresting app-based lenders, often linked to Chinese companies. Their ruthless recovery tactics have led to a dozen suicides and finally goaded the police into action. These ruthless lenders, charging usurious interest, masquerading as processing fees (to beat the Usurious Loans Act) have wreaked havoc among desperate borrowers who lost their livelihood during the lock-down. The apps, which lend small sums between Rs2,000 to Rs10,000, target low-income and financial unsavvy Indians, who fail to realise how quickly their small borrowings can balloon into a huge loan. The harassment that follows has driven many young people to suicide, pushing the police to act. The Union government has still to respond with a clear policy, though.
Nevertheless, Jio s payments bank, which debuted as the telco s answer to Airtel Payments Bank and Paytm Payments Bank, has itself not yet made significant progress in the country s payments market. It was incorporated as a joint venture between Reliance Industries and public sector bank State Bank of India (SBI) in November 2016 and started its operations in April 2018.
According to the data available on the National Payments Corporation of India (NPCI) website, Jio Payments Bank has only take a small share of Unified Payments Interface (UPI) transactions. The payments bank processed over 4.2 lakh transactions that accounted for a total of Rs. 20.35 crores in November, as per the publicly available data.