This is in continuation to my last article related to Instant Loans. There are certain apps which are absolutely fraud. It takes money from the customer in the name of advance, insurance fees, membership fees etc and once the payment is done from the borrower side these apps never proceed with the loan application. As the borrower is in bad shape, economically, due to pandemic & the amount asked by the lender is also less so with a hope in heart, he pays the amount & then regret later because nothing happens after that. The question arises why and how these applications can operate in the open market where we have numbers of authorities which keep an eye on such fraudsters. It is easy for anyone to get a place in Google play store but why RBI could not do anything before people took the extreme step. Why did the authorities not make the personal loan rules a little flexible during the pandemic when employees were having a pay cut (around 50% in some cases) and also were not receiving the salary slip.

Though by this time when I am writing this article RBI has already taken action & asked Google to block such fishy apps & android users have got the warning on their mobile phone to delete these apps but damage has been done. Can we think of a system where if someone wants to be on Google Play Store with a finance app (particularly), it becomes mandatory to be checked with the authority in various countries and only after getting approval, Google should allow these apps to function? This will block this way of routing money in the system. In the recent case, it is found that there were some Chinese nationals who were operating the apps, sitting in India which has raised a lot of questions like what authorities were doing for so long. Local police roles also can be questioned. Overall it was a dramatic situation when we have hundreds and hundreds of such apps which are operating in the system using the PAN Card & Adhaar Card issued by Indian Government & transactions worth millions have been done but nobody was having any clue about it before few people have taken the extreme step. So there are certain issues with the system which need to be tackled on an immediate basis.

Now, after this malpractices app based lender incident people are under fear to take loans on digital platforms. However, there are some banks which are also providing loans through apps like HDFC Bank, State Bank of India & even Paytm provides the credit limit. These are the well known brands so we can trust on these apps but it becomes very tough for a person to identify whether the app is registered under RBI or not and that too for a person who is in need of funds badly. Solution needs to be provided by the government and the authorized official may be giving leverage to the people who got the salary cut in the pandemic and also not getting the salary slip (in some cases). Some additional work needs to be done by banks to check the information shared by the borrower. Banks can get in touch with the concerned authorities in the organization where the borrower is working & facts can be verified. Banks can approve the loan application of the borrower if they get the satisfying answer otherwise reject but in both the cases it will give a peace of mind.

Author:
Vikas Sharma, Assistant Professor, Unitedworld School of Business (UWSB)