Applicable charges are clearly detailed to all customers before the loan approval
Many of the smaller lending apps don’t have a website. Those who do, provide no information about the company. At best, there’s an email address and a phone number. Mint reached out to some of the bigger and popular lenders that borrowers had complained about on social media.
Clarifying about the high interest rates, Ilica Chauhan, vice-president, PC Financial Services Pvt. Ltd, owner of CashBean, said: “The company’s interest rate policy has been adopted by its board of directors after taking into account all necessary considerations (costs) associated with the business. » She dismissed complaints related to aggressive recovery agents as “fake», carried out to damage their reputation.
On aggressive recovery tactics, Gaurav Jalan, founder and CEO, mPokket, said that there was only one case where a former recovery executive posted on the Facebook timeline of a borrower on his own accord. But it was sorted after the incident came to light. On higher interest rates and daily penalty, Jalan said, “These are only to discourage borrowers from defaulting. If they engage with us, we waive off the penalties on a case-to-case basis. We are also offering a moratorium depending on the financial problems of borrowers.»
Vivek Veda, chief financial officer, KreditBee, also said there were one or two stray cases of recovery agents acting up, but the company got to know about them and fired them. “We follow every social media post instant North Dakota loan, investigate the claims and act on them,» said Veda.
On Twitter, many borrowers have complained about Kissht, one of the lenders Chowdhury took a loan from, not providing the moratorium. “When the regulations came out initially, it took the industry a few days to get full clarity on implementation. Once that came through, we implemented easy access to moratorium to all our customers,» said Krishnan Vishwanathan, founder and CEO, Kissht.
what to do
Beware of smaller entities: There has been a spurt of lending apps in the past year and most of them are small entities.
According to people familiar with the ecosystem, who did not want to be named, Chinese companies own many of these apps. These companies started looking at India after their government cracked down on peer-to-peer (P2P) lending firms back home. “The Chinese government started regulating P2P lending apps due to which thousands wound up their businesses and started looking at other markets,» said Veda.
Google Play Store doesn’t allow apps that offer loans with tenures below 60 days
In India, a lot of these firms are exploiting a regulatory loophole. Most of the Chinese firms have tied up with NBFCs as they need an NBFC licence to start lending. While RBI regulates NBFCs, the apps through which the lending and recoveries are made don’t come under its purview.
There were close to 10,000 NBFCs as of , according to RBI data. Of these, only 803 have an asset size of over ? 100 crore.
Noida-based student Suraj Verma, 21, wrote to RBI complaining that mPokket is not offering moratorium despite repeated requests. He received a message that the company is not regulated by RBI and was advised to reach out to the registrar of companies.
“Around eight recovery agents, whose services were terminated, got in touch with me. Two of them said that Google had pulled out their employers from Play Store for violation of policies. But they relaunched apps under different names,» said Kalaiselvan. Mint couldn’t independently verify this.
Look before you borrow: While some opt for lending apps for convenience, others do so because they don’t meet banks’ lending criteria.