As the Reserve Bank of India’s internal working group continues to scrutinise the surge in digital loan apps across India, a number of definite offenders are emerging.
These are apps that were either lending without any licence or using wrongful practices to lure and later harass borrowers looking for small-ticket loans. Many of these apps have now been named in first information reports filed by local police authorities where complaints have been made.
BloombergQuint has accessed a list of at least ten such apps, which have been red-flagged to the RBI’s internal working group as part of a much wider list of hundreds of apps being scrutinised for possible wrongdoing. These apps also feature in the FIRs filed with various cybercrime cells across Hyderabad, Telangana.
A BloombergQuint probe showed while none of these apps are available on Google Play Store, some of them could still be downloaded as “apk” files, usually shared with users through text messages, email, or instant messaging services such as WhatsApp and Telegram. An “apk” or android package file format is used for the installation of mobile apps on android and related operating systems.
RBI did not respond to queries sent on March 10.
MyBank
Instant loan app MyBank’s apk file describes it as a “mobile-based personal loan platform”, where users with “no credit history” can apply for a short-term personal loan between Rs. 1,000 to Rs. 10,000 at an annual interest rate of up to 35%. The app claims to process these loans within five minutes.
Registered under the company, Mashangfa Technologies Pvt., the company’s address was listed as Vile Parle West in Mumbai in the apk file. Multiple calls made to the number listed there went unanswered.
As per filings with the Registrar of Companies, Mashangfa Technologies, registered on Feb. 14, 2020, as a computer-related services company, was located at Eljipura in Bengaluru. The company was formed with a paid-up capital of Rs 60,000. No further details on its financials were available with the registrar.
BloombergQuint accessed RoC filings via commercial information provider Zauba Corp.
The company has four directors, of whom two were arrested by the Hyderabad police. The investigation against the other two directors is pending, KVM Prasad, assistant commissioner of police (cybercrime) in Hyderabad, told BloombergQuint. “These individuals are linked to multiple companies that run illegal loan apps and we are searching for them,” he said.
E-mails sent to the company’s registered email ids, and calls made to numbers listed in the RoC filings, didn’t elicit any response.
Rupee Bazaar
Another name on the offenders’ list is Rupee Bazaar, which doesn’t have a website but has a Facebook page that was created in August last year. The page didn’t list an address or contact number, but numerous complaints were raised on the page by some who claimed to be its customers.
The app’s apk file described it as a payday loan company that gives “hassle-free salary advance loans” of up to Rs. 10,000, charging an interest of up to 36% per annum. The app was registered under Aojing Technologies Pvt. with its office in Wadala East, Mumbai.
RoC documents available for Aojing Technologies revealed its directors were also the former directors of Mashangfa Technologies, who are being pursued by the Hyderabad police. The company was registered on Feb. 13, 2020, as a computer services company, and its address was the same as that of Mashangfa Technologies, as per its RoC filings accessed via Zauba Corp. The company was formed with a paid-up capital of Rs 60,000. No further details on its financials were available with the RoC.
Multiple calls made to its registered mobile number went unanswered. E-mails sent to its registered email ids listed in the RoC filings also did not elicit a reply.
Snapit Loan
SnapIt Loan app’s apk file detailed the app as a “new way” to get personal loans of up to Rs 10,000 with an interest charge of 36% per annum. The app was registered under the company Excellent Weekend Technology Pvt. located in Bhandup West, Mumbai.
Based on its RoC filings, the company was incorporated on Feb. 10, 2020, as a computer services company in New Delhi, with a paid-up capital of Rs 1 lakh.
Like most others, this app too did not have any other financial details or a registered website. Different mobile numbers that came up during an online search of the app and those listed on the RoC website were also not working.
OKCash
The app, as per its apk file, gives loans of up to Rs 1 lakh on up to 36% interest rate, and shares its address with Snapit Loan in Bhandup West. But it’s run by a different company, Barico Technologies Pvt., which does not throw up any filings in the RoC. An e-mail sent to the e-mail id mentioned on its apk link did not get a reply.
Bubble Loan
Named in several consumer complaints, Bubble Loan too did not have a website. Its Facebook page, created in December last year, had a link to a defunct website. While BloombergQuint could not independently ascertain if the social media page was created by the company, the mobile numbers listed on the page were switched off when contacted. The address of the company on the page was listed as Jehanabad, Bihar. There was no apk file available for the loan app.
Cashbee
Same story here. There was a Facebook page named after the app that did not contain any information regarding the lender's website, address or contact details. The page, however, claimed its location has been moved to Gurugram. It was created in December.
Its apk file said that the company gave loans of up to Rs. 5 lakh for an annual interest levy of 36%. It described itself as an app that caters to young professionals for servicing all kinds of loan requirements.
A query sent to the email id listed on the apk file also did not get a reply.
Rupee Factory
The app too had a Facebook page linked to its name but there were no further details on its website or contact details. The page was created in September last year.
The app, registered to a Bengaluru address, gave loans between Rs. 1,000 to Rs. 10,000 for an interest charge of up to 25%, besides processing fees of up to 20% and goods and services tax of 18%, according to its apk file.
Multiple calls made to the listed mobile number went unanswered. A query sent to the email id on the apk website also did not get a reply.
One Hope and In Need
These apps did not have Facebook pages, websites, addresses or contact details available anywhere, except a few numbers of their agents that appeared in some consumer complaints and FIRs filed with cybercrime cells in India.
Paisa Loan
Paisa Loan, too, had a Facebook page but no further information on its website, address or contact details. The page, created in August last year, claimed to give personal loans online for two to 36 months, with zero collateral and interest rates between 13-24.3% per annum.
A mobile number that appeared during the loan app search was not working. There was also no apk file that could be found on the internet.
The Big Picture
The 10 apps may only scratch the surface of the digital loan problem that India found itself in the middle of.
As part of its ongoing study, the RBI internal group has found that of the over 12,000 loan app mentions found across 40 app stores, about 700-800 apps were operational in India, of which up to 300 apps could be in violation of rules, as per an internal document of RBI's working group, reviewed by BloombergQuint.
India was found to have a far larger number of loan apps compared to seven other countries studied by the RBI group. While Pakistan had 34 such digital lending apps, 112 were found in the U.S., and 60 others in U.K., Kenya and South Africa, the document noted.
During its study, the RBI group found that more than one-fourth of the loan apps in India were accessing the phone camera, contacts stored on the phone and precise location of the user, while close to 10% could record audio or take complete control of the users’ mobile device, according to the document cited above.
The instant loan apps, according to Anil Rachamalla, founder of not-for-profit body End Now Foundation in Hyderabad, earn money not just out of high interest charged on these loans, but also through arbitrary fees and penalty charges levied on the customer.
“The loan app customers end up in a debt trap as they are forced to take further loans to repay their past dues, and because the loan cycle is usually between 8-10 days, the loans and various fees charged for processing and verification pile up,” he said. “Then, the collection call centres that have complete access to the borrowers’ phones start their harassment.”
Similar observations were also made by Rachakonda and Hyderabad cyber crime cells during their investigations.
The money to the apps flows from Indian RBI-licensed NBFCs, S Harinath, assistant commissioner of police at the Rachakonda Police Commissionerate in Hyderabad, told BloombergQuint. "The money is flowing from RBI-registered NBFCs that partner with private firms, floated by Chinese nationals who hire Indian directors. These firms host instant loan apps and get all their loans financed by Indian NBFCs,” he alleged.
Citing a particular case, Harinath said that 16 instant loan apps that were found to be fake during an investigation were linked to three Mumbai-based firms, which were being funded by a Pune-based RBI-licensed NBFC.
“The RBI-licensed NBFCs are financing instant loan companies, but they don’t want to take any responsibility for the actions of these loan apps. Still, we have made them party to the case and it’s up to them to prove their innocence,” he said. “We have written to the RBI and Enforcement Directorate regarding this, now they have to take an action.”
Corrective Measures
The study underway will eventually lead to fresh regulation of digital lending in India.
Among the steps being considered is a list of checks from a data security and licensing perspective, a person directly aware of the matter told BloombergQuint on condition of anonymity. These checks would be provided to app stores to check the credentials of all the loan apps on its platform. All new loan apps looking to list their mobile apps on the platform would need to adhere to certain security guidelines related to seeking critical permissions, and prove that they are backed by RBI-licensed non-banking financial companies, this person said.
The second step would entail developing a public database of all the loan apps backed by RBI-licensed NBFCs, he said. A central portal for reporting all loan app-related crimes and complaints from different cybercrime cells in the country is also being considered.
The final report is due to be submitted by mid-April.
But the NBFCs and banks need to take the responsibility for the fraud loan app that they partner with, said Rachamalla. “The government and the RBI needs to remove middlemen from directly dealing or interacting with the borrowers. If that’s not possible, then the NBFCs and banks backing these instant loan apps should be held answerable if they charge arbitrary fees and interest rates or resort to illegal recovery practices.”
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