Brazen fleecing: High interest rates, hidden charges

People often take loans without reading the terms and conditions and play into the hands of the online lenders, says Prakasam SP

July 15, 2022 01:16 pm | Updated 05:08 pm IST - ONGOLE

Hard pressed to meet medical expenses, 25-year-old Vimala from Pelluru on the city outskirts browsed the Internet on her mobile phone for getting a cash advance of Rs.3,500. She was happy as with minimum documentation, the required amount was credited to her savings bank account through the united payment interface in no time. But her happiness was short-lived as she faced severe harassment by the staff of the firm in various ways, she recalls.

Though the rate of interest was relatively high when compared to that charged by commercial banks, she accessed the digital loan app for the swiftness at which the loan has been sanctioned without her having to run from pillar to post, says the woman who serviced the debt paying Rs.1,225 for a week's duration at the first instance in May. Again after a week, she secured a cash loan. She gave permission to get access to her confidential personal details on her mobile, including social media contacts, location as also Aadhaar card and other details. She could not service the debt in time and trouble started for the unsuspecting women as the loan app staff misused the data access by sending obscene messages to her husband, brother and other relatives. She was forced to shell out Rs.1,400 as interest for a week's period bearing all the humiliation. Then she approached the Ongole Taluka police for relief.

The experience of 26-year-old Sumathy (name changed) from Cloughpet in the city was even worse after she downloaded another quick loan app by submitting copies of Aadhaar card, PAN card and savings bank account details. She uninstalled the app after she received a message saying that her loan application has been rejected. Trouble started for the unsuspecting woman a week later. She was shocked to receive a message from the firm asking her to repay a loan of Rs.5,000 with penal interest immediately. She pleaded with the firm's staff over mobile phone that she had not taken any loan at all and provided screen shot of the bank statement. But the harassment by the staff did not stop. Following this the woman approached the Ongole II police.

Prakasam Superintendent of Police Malika Garg, who has constituted a team to crack such cases, observes that gullible people desperate to avail loan swiftly share all personal details, including their contacts and pictures in their mobile phones to the loan app firms without reading the terms and conditions and end up paying a high rate of interest and hidden charges, including processing fees. Initial experience may be good. But harassment starts thereafter. “Loan seekers face online harassment in the form of threatening calls, WhatsApp text messages and even calls to friends and family with a view to shame them. Every week, such firms double the interest rate, and if the borrowers fail to repay the firm staff send message to the names in the contact list. In many cases, the calls are made from international destinations and difficult to track, she explains.

‘Law needed’

N.V.S. Ramamohan Rao, secretary of HELP, an NGO, says a stringent piece of legislation to check the usurious money lending by private money lenders is the need of the hour. Money lenders are not required to register themselves under any authority, and are rampantly engaging in unethical practices, he adds.

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