“A large number of complaints have been received across India related to illegal digital lending apps that provide short-term loans or micro-credits at exorbitant interest rates with no processing or hidden charges, especially vulnerable ones,” the home ministry said. and for the people belonging to the low-income group,” the home ministry said in a communication to all states and union territories.
Lenders use confidential personal data such as contacts, locations, photos and videos of borrowers for blackmail and harassment.
“The harsh recovery practices following these illegal lending apps have claimed many lives across India.
“This issue has serious implications for national security, the economy and civil defence,” the communication said.
The home ministry said that these illegal lending apps which may not be a Reserve Bank of India regulated entity (RE) are largely using bulk SMS, digital advertisements, chat messengers and mobile app stores.
The borrower will have to provide mandatory access to contacts, location and phone storage to avail the loan.
The states and union territories were told, “This data is misused by recovery agents based in India and abroad to harass and blackmail citizens by using morphed images and other abusive practices.”
The Home Ministry said that after investigation, it has been found that it is an organized cyber crime that can be attributed to disposable emails, virtual numbers, mule accounts, shell companies, payment aggregators, API services (account verification, document verification), cloud hosting, cryptocurrencies etc. is carried out using .
Therefore, it is advisable to involve domain experts during the investigation.
The Ministry of Home Affairs said that law enforcement agencies will utilize the services of National Cyber ​​Crime Forensic Laboratory (NCFL), one of the mandates of the Indian Cyber ​​Crime Coordination Center (14C), CIS Division, for technical assistance on loan app analysis, malware analysis and can take advantage. Crypto transaction tracing.
“All the States and Union Territories are requested to take strict legal action in this regard. In addition, all States and Union Territories are also requested to make public in all districts against the risks of using such apps. spread awareness.”
A large number of Chinese-controlled loan apps have been found to indulge in predatory lending in recent times.
Apart from indulging in unethical practices, these apps make use of loopholes in the rules and often operate in violation of the existing rules and regulations.
Such apps came to the fore during the COVID-19 pandemic as many people across India faced financial hardship and needed money and these apps lent money for a period ranging from a week to 30 days. These lending apps will charge high-interest rates and processing fees.
Moreover, these apps are often found harassing users about paying their dues, leading to dozens of suicides.
The Enforcement Directorate recently frozen Rs 9.82 crore of Chinese-controlled loan apps parked in merchant IDs with payment gateway companies.
Lending apps are part of an ongoing Money laundering The investigation against a “Chinese controlled” investment token app, officials said.
with PTI inputs