Brazen raving: high interest rates, hidden fees

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

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

Under pressure to pay medical bills, Vimala, 25, from Pelluru on the outskirts of town, used her mobile phone to search the internet for a Rs 3,500 cash advance. She was satisfied, because with minimal documentation, the required amount was credited to her savings bank account in a very short time via the united payment interface. But her happiness was short-lived as she was severely harassed in various ways by the company’s employees, she recalls.

Although the interest rate was relatively high compared to commercial banks, she accessed the digital lending app to quickly approve the loan without having to run from pillar to pillar, says the woman who serviced the debt to pay off Rs.1,225 for one week duration in first instance in May. Again after a week she secured a cash advance. She gave permission to access her sensitive personal information on her phone including social media contacts, location as well as Aadhaar map and other details. She failed to service the debt on time and trouble ensued for the unsuspecting women when the loan app staff abused data access by sending obscene messages to her husband, brother and other relatives. She was forced to pay 1,400 rupees in interest for a week to endure all the humiliation. She then turned to Ongole Taluka Police for help.

The experience of 26-year-old Sumathy (not her real name) from Cloughpet in the city was made worse after she downloaded another quick loan app by submitting copies of the Aadhaar card, PAN card and Savings Bank account details. She uninstalled the app after receiving a message that her loan application was rejected. Trouble began for the unsuspecting woman a week later. She was shocked to receive a message from the company urging her to repay a Rs. 5,000 loan immediately with penalty interest. She asked the company’s employees on her cell phone that she hadn’t taken out any credit at all and provided a screenshot of the bank statement. But the harassment from the staff didn’t stop. The woman then contacted the Ongole II police.

Prakasam Superintendent of Police Malika Garg, who put together a team to crack down on such cases, observes that gullible people, desperate to take out a loan, are quick to hand over all personal information, including their contacts and pictures on their cellphones Pass on loan app companies without reading the terms and conditions and end up paying a high interest rate and hidden costs including processing fees. First experiences can be good. But after that the harassment starts. “Loan seekers face online harassment in the form of threatening phone calls, WhatsApp text messages and even calls to friends and family to embarrass them. Every week such firms double the interest rate, and if the borrowers fail to repay, the firm’s employees send a message to the names on the contact list. In many cases, the calls are made from international destinations and are difficult to trace, she explains.

“law required”

NVS Ramamohan Rao, secretary of HELP, an NGO, says a tough law to control usurious lending by private moneylenders is the need of the hour. Moneylenders are not required to register with any government agency and are rampant in unethical practices, he adds.

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