Application-based lending application scam surfaces; RBI warns | India is blooming
Hyderabad/IBNS: Hyderabad Police have busted a multi-crore money lending scam, run through multiple apps, which charged its targets up to 35% interest and allegedly racked up Rs 423 crore in 75 banks , which were seized for investigation.
According to media reports, the mobile apps used for this purpose have not been approved by the Reserve Bank of India.
Police arrested 16 people from Hyderabad and Gurgaon where the scam operators were found.
The presence of the loan sharks was noticed by police when three people committed suicide after being allegedly harassed and humiliated by people, an NDTV report said.
Hyderabad police have arrested seven people in connection with the crime, including a US-graduated engineer, it said.
Defendant Sarath Chandra ran the money lending operation through two companies he set up in 2018-2019, Onion Credit Pvt Ltd and Cred Fox Technologies. He was also selling loan applications to businesses in Bengaluru.
So far, seven people including Chandra have been arrested by Cyberabad Police, according to the report quoted above.
According to media reports, the company employed hundreds of young people in three call centers where customers were tricked into borrowing money through several apps and then blackmailed, threatened and vilified to get the money back. Reports indicate that the young employees trained to trap people in need of money and do clawbacks, were mostly new graduates paid Rs 10,000 to Rs 15,000.
The company employed over 1,000 people to run its operations.
The money was lent not only at extremely high interest rates, but also with several hidden charges.
As police widened the investigation, multiple layers of the suspected illegal loan company emerged, revealing links to nine non-bank financial companies (NBFCs) in Delhi, Ghaziabad, Nagpur, Mumbai and Bengaluru and in China and Indonesia, according to the report, adding that a woman with a Chinese passport was arrested in Gurgram.
Police said a multi-city investigation could help reveal the extent of the scam.
Meanwhile, the Reserve Bank of India in a statement warned against unauthorized digital lending platforms and apps that promise easy loans