The Kerala loan application crisis has now spiralled out of control and is a serious warning for all digital borrowers across the country. This is because over the past three years, around 15,000 complaints have been filed against illegitimate and illegal loan applications, along with at least 7 reported cases of suicide linked to cyber extortion, bullying and harassment as detailed in a recent report by The New Indian Express.
Furthermore, the recent death of Nithin Raj, a BDS student from Kannur Dental College, after alleged threats and harassment from a loan application, has once again highlighted how quickly these digital loan applications can turn into a financial trap and a nightmare for borrowers. Such applications can also result in serious psychological distress for individuals who avail loan and credit-related services from them.
Fundamentals of the scam and how it is conducted
In Kerala, these illegal loan applications operate silently by offering easy-looking ‘instant loans’ with minimal checks and verifications. Users often download these applications via APK links. Once installed on borrowers’ mobile phones, these applications access users’ contacts, photos, and other personal information.
Then, after disbursing a small loan amount based on the borrower’s submitted details, the operators of these applications impose exorbitant fees, hidden charges, and very high interest rates. This results in the borrower being emotionally trapped.
When repayments are missed or delayed, borrowers are harassed through repeated threat calls, messages, morphed images and public shaming tactics. The stolen contact details of the borrowers are used to defame them. Keeping these factors in mind, here are five critical lessons every digital borrower should know to keep themselves safe from such applications and scams.
5 critical lessons for all digital borrowers across the country
1. Avoid unverified loan applications completely: Make sure that you never download loan applications from unknown links provided to you through text messages or WhatsApp, and also avoid any APK files. Many major financial scams begin with unregulated applications developed to steal critical data.
2. Check RBI registration before borrowing: Be clear about whether the lending institution you are interacting with is Reserve Bank of India (RBI) registered or not. In case of doubts, don’t proceed. Unchecked and unregulated applications are the most common source of illegal loan application scams in the country.
3. Limit application permissions strictly: Don’t permit access to contact details, gallery, images, SMS, or downloaded files. Predatory applications utilise this information and data for blackmail, intimidation and harassment. Your security remains in your hands if your data is safe.
4. Never borrow under emotional or urgent pressure: Many innocent victims fall into the borrowing trap during serious financial stress, such as medical emergencies, education-related expenses or other immediate expense requirements. Be clear: Impulsive borrowing should be discouraged, as it can lead to serious financial complications later.
5. Report harassment immediately and preserve evidence: In case you are threatened, file a complaint on the National Cyber Crime Reporting Portal at: https://cybercrime.gov.in/, and to complete the process, you should also register a First Information Report (FIR) in the nearest police station. Keep a copy of the FIR and the original screenshots, call logs, and messages as evidence.
In conclusion, the Kerala loan application crisis is a stark reminder that digital borrowing requires proper due diligence and caution. You should avoid borrowing money from random, easy-looking loan applications.
If you need money, you should avail yourself of it only through trusted banks, NBFCs, and other lending institutions after proper consultation with certified financial advisors. Proper professional guidance in such situations can be of immense help to protect an individual’s peace of mind and financial integrity.
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