New Delhi: The Ministry of Home Affairs (MHA) has called on all states and central agencies to take strict action against predatory loan apps, mostly controlled by China, which use harassment, blackmail and other harsh debt collection practices, citing multiple incidents of suicides by borrowers in the country.
The ministry headed by Amit Shah has sent a letter in this regard to all state governments, union territory administrators and federal agencies such as the Central Bureau of Investigation (CBI) and the National Intelligence Agency. survey (NIA).
According to the letter, dated September 28, a large number of complaints have been reported across India regarding illegal digital lending apps that provide short-term loans or microloans at exorbitant interest rates and charging fees. treatment or hidden, especially to vulnerable people and people from the low income group.
Lenders use confidential personal data such as contacts, location, photos and videos to blackmail and harass borrowers, the letter, seen by HT, says. “The harsh clawback practices followed by these illegal loan applications have claimed many victims across India,” he said. “This issue has had a serious impact on national security, the economy and the safety of citizens.”
The letter further adds that these illegal lending apps which may not be Regulated Entities (RE) by the Reserve Bank of India use bulk SMS, digital advertisements, instant messaging and large mobile app stores. ladder. The borrower must provide mandatory access to contacts, location and phone storage in order to qualify for the loans, he added.
“This data is being misused to harass and blackmail citizens using distorted images and other abusive practices by recovery agents located in India as well as overseas who violate RBI’s Code of Fair Practices “, did he declare.
The investigation revealed that this organized cybercrime is executed using disposable emails, virtual numbers, mule accounts, shell companies, payment aggregators, API services (account validation, documents), cloud hosting, cryptocurrency, and more, the MHA said. Therefore, it is advisable to involve experts in the field during an investigation.
The ministry also said that law enforcement agencies can call on the services of the National Cyber Crime Forensic Laboratory (NCFL), one of the verticals of the Indian Cybercrime Coordination Center (I4C) for technical assistance. on lending application analysis, malware analysis and crypto transaction tracing. .
“All states and UT are urged to take strong legal action in this regard. In addition, all states and UTs are also urged to educate all districts about the risks associated with using such apps,” the letter reads.
A large number of China-controlled lending apps have recently engaged in predatory lending. The Enforcement Branch has already investigated some applications over the past year.
In addition to engaging in unethical operations, these apps use loopholes in regulation and often operate in violation of existing rules and regulations, an ED official said, requesting anonymity.
“Such apps emerged during the Covid-19 pandemic when many people across India were facing financial hardship and in need of funds and these apps lent money for periods ranging from a week to 30 days,” the official said. “These loan applications would charge high interest rates and processing fees.”
Additionally, these apps often harass users for membership refunds, leading to reported incidents of dozens of suicides, said a second official, who also wishes not to be named.
ED recently froze ₹9.82 crores of Chinese-controlled lending apps are parked in merchant IDs with payment gateway companies.